Record savings of workers in private pension funds

The savings balance that belongs to more than 18.9 million workers registered historical highs, both in their earnings and in the accumulated amount at the end of the first half of this year.

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This is reflected in the figures provided by Asofondos, which brings together the four pension fund administrators (Colfondos, Future, Protection and Skandia). The affiliates of these administrators, who these days are receiving their quarterly statement, can review it and verify the positive performance of their funds.

“We are very satisfied with these results for the savings of workers, the data for the first semester are extraordinary”highlighted Santiago Montenegro Trujillo, president of Asofondos, while recalling that “Only the system based on savings and capitalization allows workers to be given significant returns over time, let’s remember that it is a benefit that is only available in pension funds”, and reiterated that, although the short-term results are exceptional, it is important that affiliates always review in their statements the earnings that their funds have had in the long term, “also excellent returns”..

According to the Asofondos report, total savings deposited in pension funds, owned by workers, reached a new all-time high at the end of June, reaching $381.5 billion.

The yields registered in the first six months were $31.8 trillion (only in June, $10 trillion); in the last 5 years they reached $112.9 billion, while historical earnings (28 years) were $259 billion.

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The economist pointed out that, around the discussion on the pension reform, the union has been insistent that the viable scheme to have support in old age is the one that is based on savings, and grows if it is based on capitalization, “Discarding this scheme would imply depriving the worker of important returns, an essential component within his pension fund,” Montenegro reiterated.

What factors explain the excellent performance this year? The analyzes show that positive expectations are increasing due to the drop in global inflation and the corresponding drop in interest rates; There is also a greater appetite for emerging markets.

And in the case of Colombia, we see the appreciation of the public debt due to the perception that investors have about the infeasibility of government initiatives, “in the markets there is a perception of the proper functioning of the democratic institutions in Colombia and of the solidity of the counterweights to the executive power”, explained the economist.

For 29 years, pension fund administrators have managed workers’ savings, reporting profits that, out of total savings, weigh almost 70%, and this is only possible if the resources are invested year after year, under highly diversified investment strategies and in accordance with the profiles that affiliates have.

In some very specific situations, as was the case in 2022, devaluations occurred, but, as has happened in the past, The management of the AFPs in a very favorable environment made it possible to resume the positive and growing path of savings since January, as reflected in the statements that are already reaching more than 18.9 million affiliates.

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Asofondos reiterates its call for in-depth discussions of the pension reform project in this new legislature of Congress, with facts and figures at hand, and with a sense of responsibility when deciding whether to opt for a savings scheme, with improvements, that adequately responds to current and future generations; or if, on the contrary, it is reversed, irremediably destroying what has been achieved up to now.

These excellent results show the superior benefits of a capitalization system over medium premium systems.

In addition, the dramatic aging of the population and the imminent reduction of the population, in Colombia and in the world, are another reason for the pension system to be based on individual savings and capitalization.

The reform that Congress approves must build on the one built and the citizenry will be willing to respect three fundamental rights of citizens:

• Firstthat savings and their returns remain the property of the workers

• Secondthat workers continue with the freedom to choose who manages their savings

• Third, that workers continue with the right to be able to inherit their savings to their children. A project that does not respect these fundamental principles violates the fundamental rights of Colombian workers.

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