According to a new report by Colombia Risk Analysis, the debate underway over pension reform in Colombia is plagued with misinformation and confusion resulting from the current divisive political climate in the country, and conflicting objectives by various political actors.

Current protests and strikes over a myriad of grievances have partially paralyzed the country literally and figuratively. The current administration of President Ivan Duque enjoys only a 26% approval rating according to recent polls and thus lacks political capital to push through major reforms of any type, though they were able to move a modest but unpopular tax reform package through congress this month.

According to the report and Colombia Risk Analysis, the Colombian pension system urgently needs reform, as in its current form, it is insolvent over the long term.

Added to this is the large sector of the population that works in the informal economy, thus does not qualify for traditional government backed or private pensions.

In 2018, the public pension system cost almost 4% of GDP, so $12.2 billion pesos went to service pensions of only 2.1 million retirees—even though the country has an elderly population (ostensibly deserving pensions) exceeding 6.5 million. Similar to the US, Colombia has a combination public-private pension arrangement with the public RPM functioning similar to the US Social Security System, and suffering from the same fatal flaw: current pensions are financed by current contributors rather than an actuarily sound defined benefit plan.

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