The first half of this year could not have been better for the pension savings of the nearly 19 million people who contribute for their retirement in a private fund (AFP). Positive expectations given the decline in global inflation and interest rates; the appetite for emerging markets and, in the case of Colombia, the appreciation of public debt Given the perception that investors have about the infeasibility of government initiatives, the profitability of these resources shot up.
(Also read: Colombia accelerates to consolidate its immediate payment system).
In the first six months of 2023 the yields were historic and reached 31.8 trillion pesos, a historic figureaccording to Asofondos, a union that represents the four private administrators that operate in Colombia (Porvenir, Protección, Colfondos and Skandia), which also highlighted that only in June, these returns totaled 10 billion, resources that were consigned in the individual accounts of each of the affiliates of said entities.
According to Asofondos, the total savings deposited in pension funds, owned by workers, reached a new all-time high at the end of June, reaching 381.5 trillion pesos. SOnly the returns registered in the last 5 years totaled 112.9 billion, while the profits in 28 years were 259 billion.
(You may also be interested in: Avoid fines! The income statement is coming up: how do you know if you should present it?).
The president of Asofondos, Santiago Montenegro.
Filiberto Pinzón / EL TIEMPO
“We are very satisfied with these results for the savings of workers, the data for the first semester are extraordinary”, highlighted Santiago Montenegro Trujillo, president of Asofondos, while recalling that “only the system based on savings and capitalization allows workers to receive significant returns over time, Let’s remember that it is a benefit that is only available in pension funds”, and reiterated that, although the short-term results are exceptional, it is important that affiliates always review in their statements the profits that their funds have had in the long term, “also excellent returns”.
The economist said that, around the discussion on the pension reform, the union has been insistent that the viable scheme to have a support in old age is the one that is based on savings, and grows if it is based on capitalization, “Discarding this scheme would imply depriving the worker of important actions, an essential component within his pension fund,” Montenegro reiterated.
Yield Impact
For nearly three decades, pension fund administrators have managed workers’ savings, reporting profits that weigh almost 70 percent of total savings, and this is only possible if the resources are invested year after year, under highly diversified investment strategies and in accordance with the profiles of affiliates.
They explain from Asofondos, however, that in some very specific situations, it was the case of 2022, there were devaluationsbut, as has happened in the past, the management of the AFPs in a very favorable environment resulted in a return to the positive and growing path of savings since January, as reflected in the statements that are already reaching more than 18.9 million affiliates.
Under that scenario, andThe union insists that the discussions of the pension reform project in this new legislature of Congress take place in depth, with facts and figures at hand, and with a sense of responsibility when deciding whether to opt for a savings scheme, with improvements, that adequately responds to current and future generations; or if, on the contrary, it is reversed, irremediably destroying what has been achieved up to now.
And he adds that the pension reform that Congress approves must build on what has been built and citizens will be willing to respect three fundamental rights of citizens:
• First, that the savings and their profits continue to be the property of the workers.
• Second, that workers continue with the freedom to choose who manages their savings.
• Third, that workers continue with the right to inherit their savings to their children.
A project that does not respect these fundamental principles violates the fundamental rights of Colombian workers.
