Pensioners and contributors: changes in the calculation of pensions in Colombia

Misael Triana Cardona, Founding Partner of Abogados Triana, has not a minute to spare due to the inquiries his office is receiving. This lawyer, with a specialization in Social Security from the Universidad Javeriana, disregarded the recommendations of colleagues and friends, who advised him to desist from his attempts to change the jurisprudence on pension matters.

Well, his efforts bore fruit, and the lawsuit he filed -and which finally reached the Labor Chamber of the Supreme Court of Justice- changed the way in which the pensions of the average premium regime (Colpensiones and some special regimes) are calculated in Colombia, since until that ruling the pension liquidation only took into account up to 1,800 weeks of contributions to calculate the replacement rate.

The effects of this ruling will be felt by future pensioners, but also by those who already exercise this inalienable right and who contributed more than 1,800 weeks during their working life.

More than 1,800 weeks: punishment for working more?

The magistrates of the Supreme Court of Justice considered that it was unsuitable for workers in Colombia to have a maximum of 1,800 weeks of contributions taken into account when calculating their pension.

Attorney Triana explains that “in order to be able to retire in the average premium regime, 1,300 weeks are needed. That, in years, is approximately 25. That is the minimum number of weeks to be able to access an old age pension”.

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In the average premium system, the pension corresponds to a percentage of what is known as the Basic Settlement Income (IBL). The rule states that, if more than 1,300 weeks are contributed, for each 50-week package, an additional 1.5% is recognized on the IBL, up to a maximum of 80%.

“Until before this ruling, the Labor Chamber of the Court understood that there was a cap of 500 weeks, that is, from week 1,300 to a maximum of 1,800 weeks. Thus, no one could receive more than 15 additional percentage points for the weeks contributed from week 1,300 onwards”, explains the jurist.

The lawsuit filed by Triana was based on the fact that “nowhere in the Law does it say that you cannot contribute more than 1,800 weeks or that you will be taken into account until the 1,800th week. The only limit established by the Law is 80%. In this sense, all workers who have contributed more than 1,800 weeks will have their total contributions taken into account” when establishing the replacement rate applied to the Base Settlement Income.

With this change in jurisprudence, people who worked or work for more years -some complete more than 44 years- will no longer be “punished” by the system.

Who may request the adjustment?

All pensioners of Colpensiones or other entities that recognize pensions of the average premium regime based on Law 100 of 1993 and who have contributed more than 1,800 weeks, may request a review of the process to find out if they can access a readjustment or re-settlement of their pension.

The same can be done by pensioners of special regimes such as those of the Magisterio, Ecopetrol, and Banco de la Republica, among others, as long as they are recognized as average premium. “If these entities recognized pensions under Law 100 of 1993, it would be possible to review the issue”, explains Triana Cardona.

However, there is a group of workers who, although they are part of the average premium regime, cannot access this review. These are the members of the Military Forces and the National Police, and the former teachers of the Magisterio who had another regime.

It is not excessive to clarify that the change in the jurisprudence does not apply to the pensioners of the private funds, since they are not part of the average premium regime.

One by one: better individual than collective review

When asked whether it is possible to file collective claims or whether it is better to evaluate the cases individually, attorney Triana emphasizes that “the pension issue requires a very individual analysis of each member and each person. We all have different dates of birth, sex, and number of weeks of contributions.

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Legally, a class action lawsuit is possible, but it is not really advisable. It is better for each person to review, through a lawyer, if the sentence applies in his case and not to collapse the justice system”.

How pensions are calculated

There are several factors to calculate a pension. The first is the Base Settlement Income. This is the indexed average of the last 10 years of work or of the entire working life, whichever is more convenient for the contributor.

Another factor to keep in mind is that “for the first 1,300 weeks the worker is given a replacement rate that ranges from 55% to a maximum of 65%. That is the initial rate, and it depends on how much you earned. For example, a person who contributed over one minimum wage starts with a maximum replacement rate of 65%, while a person who earned 25 minimum wages starts with a minimum rate of 55%.

Here comes the interesting part: when the affiliate has to contribute more than 1,300 weeks, the law says that for each additional 50 weeks, an additional 1.5% is given. Thus, a worker can increase the percentage up to a maximum of 80%”.

What happens if you have already contributed more than 1,800 weeks?

If you are already a pensioner and have contributed more than 1,800 weeks, the lawyer recommends the following:

“First, a study must be made. If this initial study shows that you can have a positive effect on your pension, you should make a claim to Colpensiones. Unfortunately, Colpensiones is not going to recognize this directly. Colpensiones, we must say, does not comply with the jurisprudence.

And what does the person have to do? Hire a lawyer to file a legal action, which is an ordinary labor lawsuit, asking the judge to please allow those weeks that he/she contributed from 1,800 weeks onwards to be taken into account”.

In response to the question of whether people who are already pensioners and have contributed for more than 1,800 weeks can request a review of their liquidation, the interviewee clarifies that “anyone can do it, even if they have been pensioned 40 years ago.

But, it should be clarified, retroactivity will only be paid for the last 3 years, counted from the date on which the claim is made”. It is essential to be clear about these times in order to avoid false illusions or expecting more money than is actually going to be paid, he emphasizes.

A long, but successful process

In order to get the Labor Chamber of the Supreme Court of Justice to review the lawsuit he filed, Triana had to go through several instances. “Changing jurisprudence in this country is not easy”, he says.

While drawing a smile of satisfaction for having achieved a change that will benefit thousands of workers and pensioners in Colombia, Misael Triana Cardona summarizes: “This felt like going through the Stations of the Cross, but it was worth it”. After a long process, “the Labor Chamber of the Supreme Court of Justice changed its position and said: this gentleman is right and from now on we must start thinking differently and allow all the weeks that a person has contributed to be taken into account, with the 80% limit”.

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