US embassy cable - 05BOGOTA5017

UNCLAS BOGOTA 005017 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV, EFIN, CO 
SUBJECT: Details of Pension Reform Legislation 
 
1.  Background: Approximately 6.1 million Colombians receive 
some sort of public pension assistance.  In 2003 COP 5.6 
trillion (USD 2.4 billion) went towards the public pension 
system.  In 2004 the number increased to COP 6.7 trillion 
(USD 2.9 billion).  However, while GOC is forced to allocate 
more money to the public pension system, the program's 
revenues are declining.  In 2003 the pension system received 
COP 2.2 trillion (USD 943 million) and only COP 1.9 trillion 
(USD 815 million) in 2004.  This system cannot sustain 
itself without some drastic changes.  The proposed pension 
reform bill has passed 6 of the 8 Congressional debates. 
Two debates in the Senate remain before the law can be 
amended to the Constitution.  The following lists the most 
noteworthy reforms, most of which would apply only to those 
who retire on or after August 1, 2010: 
 
2.  Retirement age to rise:  Effective July 31, 2010, 
Colombia's official retirement age would rise from 60 years 
to 62 years for men and from 55 to 57 years for women. 
There is an exception for workers who have a minimum of 15 
years of service by July 31, 2010; their transition period 
would end in 2014. 
 
3.  14 monthly pension payments drop to 13:  Previously 
those people who were eligible for public pensions received 
14 payments throughout the year.  The bill would eliminate 
one of those fourteen pension payments for all retirees. 
This provision is effective immediately upon passage for new 
retirees, but will not affect current pensions. 
 
4.  Fewer privileged groups:  The current pension system is 
loaded with exceptions for diplomats, congressmen, oil 
workers, and others. Excepted groups were allowed early 
retirement and/or increased pension payments.  The new 
pension bill would eliminate most of these privileges by 
August 1, 2010.  Only the president of Colombia and those 
who served in the military would be granted exceptions to 
the pension regime. 
 
5.  Pension ceiling:  Currently, 90 percent of those people 
receiving pensions only obtain payments which are 1-2 times 
the minimum wage (approximately USD 80-160 a month).  Many 
high level government officials receive pensions which are 
much higher than the rest of the population.  Beginning in 
August of 2010, a pension can be no greater than 25 times 
the minimum wage. 
 
6.  Comment: Colombia's pension reform legislation is now in 
the hands of the Senate, which has until June 24 to pass the 
bill through committee and a final plenary debate.