The businessmen of the different sectors of the country’s production, gathered in the National Trade Union Council (CGN), sent a letter on Monday of this week to the senators who are presenting the pension reform project, in which they not only insist on the negative effects that this initiative can bring if it is approved as it is, even with the adjustments made before its presentation in Commission VII of that legislative cell, but also in which they make a series of comments, precisely, on the articles that cause the greatest concern and concerns they generate.
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After making a detailed analysis of some structural aspects of the pension project, such as the demographic transition and the sustainability of the system; pension savings and the tax effect; labor formality, minimum wage and equity; as well as the capital market and competitiveness, the CGN, headed by its president, Germán Arce, insists on the urgent need to know the aspects that the Government has taken into account to establish fiscal viability and sustainability required so that the purposes of the solidarity, semi-contributory and contributory pillars can be made effective, since in consideration of the businessmen and their analyzes the accounts do not meet the objectives outlined in the project.
“It is worth analyzing factors such as demographic growth, possible increases in the pension liability and sustainability measures aligned with the postulates of the Fiscal Rule,” they point out in their letter.
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For businessmen there are three concerns that concern them in the solidarity pillar and they have to do with the origin of the resources to cover this payment, how protection for the elderly will be guaranteed and if this pillar is included in the pension liability estimates.
“This is of great importance for the sustainability of the system, since from the budget logic the solidarity pillar could be interpreted as a subsidy that depends on the budget availability of each year and the government program, in this sense it can generate uncertainty regarding the permanence of this pillar over time”, he points out in CGN.
Regarding the Savings Fund proposed in said initiative, the businessmen reiterate that the law guarantees that it has an institutional government and an investment statute that allows it to be managed under market conditions, with its profitability as the objective.
Insist, in this sense, on the need to save all the contributions that go from the pension funds to Colpensiones. “This is the only way to moderate the burden left to future generations. Under the current wording this does not happen.”
contributing pillar
One of the most controversial issues has been the contributory threshold for this pillar established by the current pension reform, which is at three current monthly minimum wages, which from different unions and study centers has raised the need to reduce it to between 1 and 2 salaries.
According to the Trade Council, modifying this threshold to improve equity and reduce the fiscal cost of the reform by 20 percent of GDP in present value, in accordance with what was stated by the Autonomous Committee of the Fiscal Rule (CARF). From an equity perspective, it is worth remembering that the higher the threshold, the greater the subsidies received by all pensions that are liquidated above said threshold.
The employers also insist that with the reform the freedom of choice is lost on the part of 88 percent of workers, who are those with incomes of up to 3 minimum wages, since they will be subject to making their contributions to Colpensiones even when their preferences are others.
In that sense, suggesting allowing workers to have the alternative of making their contributions to public or private entities under the same rules of the game. Thus, the contribution threshold can be maintained at the time of liquidating the pension, making explicit until that moment the subsidies that are implicit today.
Pension insurance and life annuities
Regarding pension insurance and life annuities, note that greater clarity is required on the conditions, coverage, adjudication and rates. The businessmen argue that this is essential to estimate the obligations that would be assumed by the insurance companies and guarantee the sustainability of the insurance in the long term. “A painful lesson from Law 100 is that leaving the insurance rate in the Law does not allow modifications to be made with the agility that is required in a changing environment in terms of demographics, socioeconomics, etc., which implies constant changes in the accident rate” .
Another of the aspects mentioned by the CGN in the letter sent to the senators this week is related to the contribution by days, since in the text of the filed project it is indicated that a quarter of the minimum wage will be the base income to calculate the minimum contribution (minimum weekly contribution) and that the daily contribution will be made in proportion to the minimum daily wage “when the activity and the regulation so allow”.
Faced with this aspect, the businessmen point out, the text does not establish what regulation is referred to or if it will be regulated later by the National Government. Thus, the quote for days would be inapplicable.
In this regard, it is relevant to point out that this contribution authorization for periods of less than one month should also be considered within the labor reform project, considering that they are two reforms that must be synchronized under a single social security system, beginning to increase the formalization rates labor in the country.
They further add that It is necessary to establish clear parameters that allow the contribution for time worked by part-time dependent and independent workers, for days or hours, or with income less than a minimum wage. In such a way that, the contribution base income, in addition to taking into account the days worked, also takes into account the income.
For the CGN, it is also essential to clarify that this contribution authorization for periods of less than one month should also be considered within the labor reform project, to the extent that these are two reforms that must be synchronized under a single social security system, allowing increase labor formalization rates in the country.
