Colombians’ retirement age will change in a few years: “It’s inevitable,” said the Universidad del Rosario observatory.

The recent pension reform introduced by Law 2381 of 2024 has caused a change in the pension environment in Colombia.

The new norm, based on a system of pillars (semi-contributory, contributory, solidarity and voluntary savings), seeks to provide greater protection for workers and pensioners and guarantee a solidarity income for more than two million older adults and those on the margins of the pension system.

Despite its recent approval Over several years, it will be inevitable to adjust key parameters such as retirement age, contribution rate and contribution weeks.as explained by Diana Mena, a researcher at the Labor Observatory at the Universidad del Rosario.

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The Labor Observatory at the Universidad del Rosario presented the main coverage data in the country and in the world to identify progress, challenges and opportunities to improve the coverage and sustainability of the system.

Colombia lags behind in social protection. except for health, Only 35% of the population is entitled to at least one benefit of social protection, unlike countries such as the United Kingdom and Mexico, where 100% and 72% receive benefits, respectively, according to the ILO.

According to Jessica Gil, a researcher at the observatory, the health coverage rate for the working-age population (PET) in Colombia is 95%. However, Only 43% of the employed population is affiliated to the pension system, which poses significant challenges in terms of coverage and sustainability of the system.

Researcher Julián Montañez says it’s obvious the gender gap in contributions that started to appear after the covid 19 pandemic, in favor of women.

By 2023, the gap has reached 4.2 percentage points, suggesting that more women are contributing to pensions than before, a significant change that may be related to employment policy or changes in post-pandemic employment dynamics.

However, only 14% of employed older adults contribute to a pension fund, leaving the majority of this population without financial support for retirement. in contrast 59% of employed young people contribute to the scheme, although 41% still do not, reflecting the need to support the formalization of youth employment.

On the other hand, when it comes to gender, it is clear that while 58% of men contribute, only 55% of women do so, underscoring the job insecurity that affects female workers, says Pamela Caiza, a researcher at the Labor Observatory of the University of Rosario. Caiza points out that the insurance system will also face challenges in the future.

Although health coverage exceeds 90%, territorial disparities in access, quality and vulnerable populations persist, exacerbated by factors such as ageing, the introduction of medical technology and the increase in demand for services.

According to previous research, this could require an increase in resources by up to 1.9% of GDP by 2030, said observatory researcher Diana Mena. He added to that Informality, which reached 56% of the population in 2023 without contributing to the system, poses challenges for the sustainability of the pension system.

The new reform would affect those already approaching retirement age. These people will have to adapt to the new provisions, which can they include adjustments to the amount of contributions or requirements for access to the pension.

For those in a vulnerable situation who have not collected enough weeks of benefits, the reform offers a possible benefit of solidarity income.

In addition, the rule allows those approaching retirement age, specifically those who are less than ten years old to reach retirement age, to choose a transfer from a private fund to Colpensiones and vice versa, which provides them with additional financial support.

The reform also emphasizes the need for future retirees to review their retirement strategies and assess whether it is beneficial to continue contributing or whether it is beneficial to receive a pension under new conditions.