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Colombia: ASOFONDOS proposes four principles that should be included in the pension reform

26 April, 2012

Source: www.inese.es

The Colombian Association of Pension and Retirement Fund Managers (ASOFONDOS) has still not drawn up a proposal for the pension reform and is awaiting the bill of law that the government will submit in the second half of 2012. Nonetheless, the Chairman of the Trade Association, Santiago Montenegro, has put forward four guiding principles for the reform which, in general terms, coincide with the declarations of the Minister of Labor, , Rafael Pardo.

In a report in ‘Portafolio,’ Montenegro says that the pension reform must go through because coverage of the current system is very low – barely one third of workers are currently contributing towards their retirement in the two pension regimes: the PAYGO system and the AFP individual savings system, and “coverage has to be significantly increased.”

In this regard, the system is very unfair since the considerable state subsidies focus on a handful of pensioners instead of protecting the poorest workers. The Board of Directors of ASOFONDOS adds another two principles it considers crucial to change, namely that the reform should aim at making the pension system sustainable and that it should be as transparent as possible.

Within the current environment of changes to the pension system prevailing in the country, the 5th International FIAP-ASOFONDOS Congress began today, April 26, in Cartagena, attended, among others, by the winner of the 2004 Noble Prize in Economics, Edward C. Prescott, who will present a long-term analysis of economic cycles and financial crises.

The Minister of Labor, Rafael Pardo; the ex-President of the Republic, César Gaviria; the representative of ECLAC (CEPAL) for Colombia, Olga Lucía Acosta; and the President of the National Association of Financial Institutions (ANIF), Sergio Clavijo, will talk in a panel on the pension reform. The panel will be moderated by Roberto Junguito, ex-Minister of Finance and President of the Federation of Colombian Insurance Companies (FASECOLDA).

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