News about Act 2381 of 2024: New Pension System

How is the system structured?

1. Solidarity pilar:

Integrated by Colombians residing in the national territory in conditions of extreme poverty, poverty and vulnerability. This pillar will only be applicable to Colombian Residents in the country. 

How is it financed?

Its benefits are financed jointly and severally with resources from the National General Budget and with those of the subsistence sub-account of the Pension Solidarity Fund.

Requirements: 

• Not having a pension.
• Belong to the group of extreme poverty, poverty and vulnerability, according to the targeting established by the National Government.
• Older adults who are 65 years of age for men and 60 years of age for women in extreme poverty.
• Man over 55 years of age with a disability and having a loss of working capacity equal to or greater than 50%.
• Woman over 50 years of age and have a loss of working capacity equal to or greater than 50%.
• Not having a source of income that guarantees a dignified life.
• Proof of residence in Colombian territory for at least 10 years immediately prior to the date of submission of the application for access to the Basic Solidarity Income.
• People who are beneficiaries of the Older Colombia program will not be able to access the Basic Income of the solidarity pillar.

What does this “Basic Solidarity Income” correspond to?

A Basic Solidarity Income will be recognized corresponding at least to the extreme poverty line certified for the year 2023, increased by the variation of the Consumer Price Index (CPI) certified by DANE for the year 2024.

This rent will be updated annually as of January 1 of each year in accordance with the variation of the CPI of the immediately preceding year. e Consumer Price Index (CPI) certified by DANE for the year 2024.

2. Semi-contributory pillar:
Made up of persons affiliated to the system who at 65 years of age for men and 60 years of age for women have not met the requirements to access a contributory pension having contributed to the system. It also includes people who are in the Periodic Economic Benefits Program (BEPS), in accordance with the regulations in force.

How is it financed?

Its benefits are financed with resources from the General Budget of the Nation and with its own contributions through the different mechanisms adopted for this purpose by the National Government.

Characteristics:

• The benefits may not exceed 80% of the minimum salary.
• The benefits granted herein may not be substituted by death, nor inherited.
• The provisions of articles 37 and 66 of Act 100 of 1993 are maintained regarding the substitutive indemnity and refund of balances for those members who have contributed up to 299 weeks. They must inform the pension fund of their intention to use this modality.
• The life annuity can only be accessed after exhausting the other possibilities offered by this law in terms of equivalences.

3. Contributory pillar:

Integrated by dependent and independent workers, public servants and persons with the capacity to pay contributions, who are Colombians residing in the national territory and Colombians domiciled abroad.

The age and weeks of contribution requirements established in the previous legislation are maintained.

This Pillar is composed of:

1. Medium Premium Component: Made up of members of the system whose base contribution income is from 1 SMLMV to 2.3 SMLMV.
2. Complementary Individual Savings Component: Made up of members of the system whose base contribution income is higher than 2.3 SMLMV and up to 25 SMLMV.

How is the pension granted?

The pension corresponds to the sum of the values resulting from both components, provided that all requirements are met. For contributions, whoever earns more than 2.3 SMLMV, will make contributions to both components as follows:

• Up to 2.3 SMLMV to the Average Premium component.
• What exceeds 2.3 SMLMV to the Individual Savings component.

Who manages the resources?

The administration of the resources of the Medium Premium Component of the Contributory Pillar will be administered by the Central Bank of the Republic, called “Contributory Pillar Savings Fund”, except for those who were affiliated to the Medium Premium with Defined Benefit Regime at the entry into force of this Law, for the beneficiaries of the Transition Regime and for those who receive an allowance from Colpensiones.

With respect to the Individual Savings Component of the Contributive Pillar, the resources will be managed by the private funds, trust companies, life insurance companies and brokerage firms, by Colpensiones or the entity acting in its stead, in the respective individual savings accounts of each member.

4. Voluntary Savings Pillar:

Made up of individuals who make voluntary savings through the mechanisms that exist in the financial system, to supplement the amount of the integral old-age pension.

• How does the Transition Regime operate?

Act 100 of 1993 will apply to those persons who have 750 weeks of contributions, in the case of women, or 900 weeks of contributions, in the case of men.

Those who meet the above requirement and are less than 10 years away from the pension age, will have 2 years, from the issuance of the new Law, to transfer from the regime with respect to the previous regulations, prior to the double counseling referred to in Act 1748 of 2014.

Those who are not beneficiaries of the transition regime and contribute above 2.3 SMLMV must select an Administrator of the Complementary Individual Savings Component within the first 6 months, counted from the issuance of the law. Upon expiration of the term, if they fail to do so, they will be randomly assigned, through the mechanism established by the National Government.

To whom does the Law not apply?

• To persons affiliated to the special and exempted pension regimes in force.
• To those who have an old age and disability pension or benefit in the General Pension System or in the special or excepted regimes.

Who are voluntary affiliates?

• Los Colombians domiciled abroad, regardless of their migratory status, when they do not have the status of mandatory affiliates and are not expressly excluded by this law.
• ·       Foreign workers, bound by an employment contract who remain in the country and are not covered by any regime in their country of origin or any other.
• When will the new provisions start to be applied?

In accordance with Article 94 of the Law, it will become effective as of July 1, 2025.

What are the obligations of the employer and contracting party for the rendering of services?

Employers and contracting parties will oversee making the contributions and payment of the contribution of the workers or contractors in their service, in the Contributive Pillar, and will be responsible for the totality of the contribution even in the event that they have not made the discount to the worker or contractor, with the penalties that may be applicable in case of non-compliance.

It is important to consider that with the new Law, the contracting party for the rendering of services will be responsible for making the contribution to the Integral Social Protection System. The Law clarifies that this contribution does not imply by itself the existence of an employment relationship, without this implying that forms of contracting expressly prohibited by law are enabled.

What are the special benefits with respect to the full old age pension?

• Benefit for mothers or fathers with an invalid or disabled child.
• Benefit of weeks for women with children.
• Early old-age benefit.
• Family pension.

What is the change in the contribution to the pension solidarity fund?

Those who receive a base contribution income according to the following values, will be responsible for an additional contribution to the Pension Solidarity Fund as follows:

Pensioners who earn a monthly allowance higher than 10 SMLMV up to 20 SMLMV will contribute 1% to the fund and those who earn more than 20 SMLMV will contribute 2% to the same account.

Can the Constitutional Court intervene in the application of the Law?

A review by the Constitutional Court will only proceed if there is a constitutionality claim against the articles, since it does not have automatic control by this Corporation as it is not a Statutory Law.

[1] This group of people will also receive the benefit granted under the Solidarity Pillar.

[2] The life annuity in no case constitutes a pension.