Colombia’s Ministry of Finance has warned that several proposals in the pension reform under discussion in the House of Representatives would have negative fiscal and operational effects. The ministry issued its concept as the House debated the bill, and the plenary the same day rejected a proposal to eliminate the 0.7% commission charged by pension fund administrators, the AFPs. Lawmakers also voted 103 against modifying Article 36.
Defending the AFP commission
The ministry defended the 0.7% commission, which AFPs may charge on total assets until the comprehensive old-age pension is consolidated. It said the fee covers the cost of temporarily managing funds of current members moving to the public Prima Media component. Eliminating it would cut AFP administration income by 77%, the ministry said.
The ministry also cited Article 48 of the Constitution, which requires laws to keep the pension system financially sustainable.
Cost of cutting women’s weeks
Article 36 would let women who reach pension age at Colpensiones without 1,000 weeks deduct 50 weeks per child, up to three children, and retire with 850 weeks. The ministry estimated the fiscal impact of that change at 3.5% of GDP in 2025, equivalent to 64.9 trillion pesos. Lowering the threshold would create an additional deficit for Colpensiones and for the Minimum Pension Guarantee Fund, the ministry said.
Within the reform, the ministry put the pension liability at 19.4% of GDP after the change to 1,000 weeks, rising to 22.9% in total. Actuarial liability would move from 16.7% to 19.7% of GDP, according to Superfinanciera and Colpensiones.
Source: Colombia's Ministry of Finance
