Save to Advance: Analysis and Recommendations on the Pension Reform in Colombia
By Manuela Restrepo, Camilo José Ríos, Andrés Mauricio Velasco & Andrés Zambrano
In March of 2023, the Government filed a Bill that seeks to modify the Colombian pension system.
The Bill contemplates a four-pillar scheme: a social transfer pillar named Solidario, a semi-
contributory pillar, a contributory pillar, and a voluntary savings pillar. This paper presents a
summary of the Bill filled in Congress, followed by an analysis of its implications for fiscal
sustainability and macroeconomic stability. As a result, we recommend that the contribution
threshold to the public system should be limited to one minimum wage in order to reduce
regressive subsidies and increase the stock of national savings. Additionally, we suggest that all
the new contributions to the public system must be saved and should only be spent for the
contributory pillar. This will promote the sustainability of the system in the long run. Finally, the
savings fund should follow an investment statute that seeks to maximize profitability to reduce the
fiscal impact of the Bill.
Source @SSRN
