The pension system enters the Colombian presidential debate

Bogotá, 16 Mar The proposal to transfer to a public fund the pensions that Colombians have in private funds, made by left-wing candidate Gustavo Petro, upset the race for the presidential elections on May 29 and put the discussion of a reform of the sector on the table. Petro, a candidate for the Historical Pact, proposed Monday in a debate changes in the pension system, including to use those resources to increase subsidies received by the poor, which has been interpreted by his rivals and analysts as a “confiscation”. The first reaction came from the Colombian Association of Administrators of Pension and Unemployment Funds (Asofondos), which called on the presidential candidates to give a rigorous, responsible, informed discussion, and above all with a focus on the welfare of workers. That is, after Petro also said that private funds charge a 30% commission for the administration of those resources. “It is not true that pension fund commissions are 30%, they are 3% and are the same as those that exist in Colpensiones (state),” said Asofondos president Santiago Montenegro, referring to what he called “the lies that the presidential candidate, Gustavo Petro, has spoken.” MIXED SYSTEM In Colombia, there is a mixed pension system that allows workers to contribute to the state-owned Colpensiones, under the medium premium system, or in one of the private funds that entered the Colombian market in 1993 and function as individual accounts that receive worker contributions and income, the amount of which is determined the pension at the time of retirement. Montenegro also denied that private pension funds have invested part of the money deposited by workers in infrastructure works that have resulted in problems and said that it is necessary to “defend the pension savings that are owned by Colombian workers.” Economist Jorge Restrepo, associate professor of Economics at Universidad Javeriana, said that “it is not true that the resources of individual pension savings are a public resource or state property.” “Pension and corporate contributions, and income are owned by every person who saves for retirement; to nationalize it as he (Petro) proposed would be to expropriate it,” he said on Twitter. In Colombia, where women retire from the age of 57 and men at age 62, the pension system has a deficit of 42 trillion pesos (about 10.95 billion dollars), according to Asofondos, which does not hide its concern about the possibility of private funds becoming public because it would be further committed the ability to guarantee the pensions of the future. WIDESPREAD CRITICISM Petro's rivals rejected the leftist leader's proposal on the grounds that it goes against workers, starting with Federico Gutiérrez, candidate of the right-wing coalition Team for Colombia, who in the same debate stated: “Petro is going to put Colombians' savings in pension funds at risk.” “Financing social programs with pension savings doesn't just compromise future pensions, it's also unfair. We propose to finance basic income to older people with progressive taxes. Petro proposes to do so with the future income of the middle class,” Sergio Fajardo, of the Centro Esperanza Coalition, wrote on Twitter. In turn, Ingrid Betancourt, of the Green Oxygen party, assured on social networks that his commitment is “to protect the savings of Colombians, and to be responsible to young people to guarantee them a pension.” The controversy was held by Colombian President Iván Duque, who said that Petro's proposal to dispense with private pension funds and send these savings from workers to the public system is to “steal citizens' savings and put it at the service of politics.” “Talking about taking those resources away from funds is an expropriation, that is simply a playpen like what we saw in other Latin American countries,” said Duque, who considered it “serious” that proposals are being made “with lies” that seek to “delegitimize” a pension system that “can be improved.” Because of the deficit accumulated by the sector and its low coverage, since only 22.5 per cent of men of retirement age can access this right, while for women the rate is lower, at 12.1 per cent, a reform of the pension system is imperative that no government has decided to undertake because of the political cost that entails. CHIEF joc-com/jga/cfa