To pay pensions from birth: what very few knew about the Colombian pension system

The discussion about the pension reform has raised questions among Colombians about this pension system and its benefits. One of these questions has attracted attention because of its simplicity: from what age can an old-age pension be paid in Colombia?

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However, the answer to this question is more surprising: from any age. In the case of the Individual Savings with Solidarity Scheme (RAIS), which is managed by the private pension funds, this means that a Colombian can pay a pension from the first day of his or her birth and reach adulthood with significant savings plus the respective return on the amount contributed.

On the subject, Daniel Wills, technical vice-president of the Colombian Association of Pension and Severance Funds Administrators (Asofondos), assured that paying pensions from early childhood is a possibility of the Colombian pension system.

“From any age it is possible to pay pensions in a particular way. For minors there are voluntary pension funds”, Wills explained.

An example of the above, Daniel Wills said, is the case of a godfather of a newborn baby who gives him a pension fund as a gift from birth. That baby, when it reaches the age of majority, will not only have the savings for its old age pension, but also the profitability accumulated during those 18 years.

According to the representative of the private pension funds, “what happens with pension funds and, in general with such long-term savings, is that the profitability begins to accumulate over time”, Wills said.

Private funds are not the only ones in which pensions can be paid from birth, since it is a possibility allowed by the pension system, which also includes the Average Premium Regime (RPM), managed by Colpensiones.

In the case of Colpensiones, minors can make voluntary contributions, according to the law.

Paying pensions from childhood: What does Colombian law say?

Pensions in Colombia are part of the social security system with which the State protects its citizens. Therefore, affiliation to the pension system is a right, rather than a rule. However, experience dictates that such affiliation is understood in most cases as forced, as an obligation in order to be hired, and voluntary affiliation is left aside.

In an article by attorney Luis Alberto Torres Tarazona, of the Labor and Social Security Observatory of the Universidad Libre, the author explains that Colombian regulations contemplate voluntary affiliation to the pension system.

According to the lawyer, the regulation contemplates that among the voluntary affiliates are:

“All natural persons residing in the country; Colombians domiciled abroad, who do not have the quality of mandatory affiliates and who are not expressly excluded in the present law; pensioners who return to the labor mass and foreigners who, by virtue of an employment contract, remain in the country and are covered by any regime of their country of origin or any other”, Torres Tarazona quotes.

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According to the explanation, Colombians and foreigners with a work permit in Colombia may voluntarily pay a pension at any age (Article 1 of Law 797 of 2003).

It also states that such benefit must be guaranteed by both systems, the one administered by the private pension funds (RAIS), and the Colombian State administrator, Colpensiones, (RPM).

As it is a right of all Colombians, Torres Tarazona assures that there cannot be any impediment to pay a pension at any age, that is to say that this aspect is not valid for Colpensiones or the private pension funds to restrict entry to the system.

In this regard, the lawyer explains that Law 100 of 1993 does not prohibit affiliation to the pension system for minors.

Law 797 of 2003 states that social security applies to all Colombians living in the national territory; it also states that natural persons residing in Colombia may join the pension system as voluntary affiliates.

Finally, the Constitutional Court established that there are no age limits for pension affiliation, the lawyer points out.

Researchers have found that both the private funds and Colpensiones have restricted Colombians from joining the pension system.

However, and in spite of what the pension regulations specify, the Labor and Social Security Observatory of the Universidad Libre found that both the private pension funds and Colpensiones have denied voluntary affiliation to the system.

In this regard, the Observatory questioned Asofondos on the subject and found evasive answers that claim “that they are an entity regulated by private law, that they are not an AFP and that they are not competent to conceptualize on social security”, explains the article by Torres, who also highlights that “the pension administrators (PA and AFP) are called to apply principles such as progressiveness, universality or pro homine, among others, in order not to discriminate against people because of their young age”.

Regarding the cases reported with Colpensiones, the Observatory also found that the State administrator prevents affiliation due to young age. When asked for the reasons, Colpensiones explained “that they cannot access this category, because they are economically dependent on their parents”.

Attorney Luis Alberto Torres points out that the issue raised by Colpensiones “is not only restrictive, unequal, inequitable, but also excluding, since they do not apply the universal coverage that Law 100 of 1993 and the Political Constitution has as a characteristic and principle of social security in Colombia”.

In turn, and understanding that the current regulations do not prevent voluntary affiliation to the pension system due to age, the Observatory’s lawyer affirms that both minors and senior citizens can pay pensions.

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