Santiago Montenegro, president of the Colombian Association of Pension and Unemployment Fund Administrators (Asofondos), issued new warnings about the consequences to apply the announced pension and labor reforms.
According to the executive, what has been seen of the labor reform so far points to an increase in the informality of the labor market.
In his speech before heads of companies convened by the Forum of Presidents in Bogotá, Montenegro say that the pension reform could increase the pension liability from 90 to 270 percent of the gross domestic product (GDP).
He also said that the current account deficit could increase from 6 to 8 points of GDP, giving rise to a balance of payments crisis.
He also reiterated what was said by various experts in the sense that it would also make it difficult to refinance the public debt, and the financing of both the public and private sectors would be at risk. The president of Asofondos said that the subsidy that is expected to be paid to older adults who do not have a pension today would be worth 30 billion pesos a year.
If that amount is added to the 18 billion pesos that the new minimum income subsidies that would start in April will cost, it would reach 48 billion pesos.
In the same session, Gustavo López, president of the Forum, said that one of the aspects that is disturbing from the points that have been made known about the pension reform is related to the fact that the pension savings belong to the workers “and you can’t start producing income that won’t be for them.”*EL TIEMPO is part of a conglomerate of companies to which an AFP belongs.
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