Thousands of retirement pensions in the Colombian state fund (Colpensiones) could increase due to the new way of calculation
Few Colombians know that, as a result of a lawsuit filed by lawyer Misael Triana Cardona, founder of Abogados Triana, the Supreme Court of Justice eliminated the maximum number of weeks that were taken into account to calculate the pension in Colpensiones and some special regimes that are also part of the average premium regime, such as those of the Teachers’ Union, Ecopetrol and Banco de la República, among others.
That’s right, if you are one of those who worked for many years and are about to retire or have already retired, no matter how long ago, this is of interest to you.
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The Supreme Court considered it inappropriate for workers in Colombia to have a maximum of 1,800 weeks of contributions taken into account when calculating their pension, as this punished those who had worked the most.
Now, with the change in the jurisprudence, all the weeks that the worker has worked must be recognized when determining what percentage of the Base Settlement Income (IBL) will be recognized and, to that extent, what will be the amount that he/she should receive each month for his/her pension.
If you have already retired -no matter how long ago- and they did not take into account all the weeks worked, you may request a review of the process to see if you are eligible for a readjustment or reinstatement of your pension. However, retroactivity only applies for the last three years, counted from the date on which the claim is made.
And, if you are about to retire, you can request that all the time worked be taken into account when calculating your pension.
In any case, if you think that this change in the way of calculating the pension could benefit you, it is better to consult an attorney, since it is necessary to request the benefit in order for it to be applied.
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How is the pension currently calculated in the average premium regime?
In the average premium regime, which is that of Colpensiones and some special regimes, it is necessary to have contributed 1,300 weeks -approximately 25 years- to access a pension.
The amount that the citizen will receive each month depends on the percentage of the Base Settlement Income that is recognized, i.e., the replacement rate that is applied. The starting point of the replacement rate is a percentage ranging from 55% to 65%, depending on the contributor’s income.
If the contributor, for example, contributes on one minimum wage, the initial replacement rate will be 65%, while if he/she contributes on 25 minimum wages, he/she will start with a rate of 55%.
However, for each package of 50 weeks in addition to the 1,300 weeks contributed, the replacement rate increases by 1.5%, up to a maximum of 80%.
Thus, if a person has contributed many weeks and manages to increase his replacement rate up to a maximum of 80%, this means that he will receive 80% of his Basic Settlement Income (IBL) each month. This, in turn, corresponds to the indexed average of the last 10 years of work or of the entire working life, whichever is more convenient for the contributor.
What has changed with the lawsuit is that the contributor will have to take into account all the weeks contributed -and not a maximum of 1,800 weeks, as was previously the case- when calculating the additional weeks packages to the 1,300 that grant the right to retire, so as to achieve the highest possible replacement rate, without exceeding the 80% ceiling.
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