Pension reform must think about the future of young people: Asofondos

The president of Asofondos, Santiago Montenegro, said that the pension reform must be carried out with the future of young people in mind and that it must be sustainable also after the next elections.

He pointed out that the reform cannot ignore the phenomenon of the rapid aging of the population, which means fewer active workers every day for every older adult. medium premium systems, such as those from Colpensiones, are unsustainable.”

According to the economist, if today’s young people are old, there will not be enough young people to pay their pensions, “intergenerational solidarity should not only be from young people to old people, but also from old people to future generations at the same time.” do not impose unpayable burdens on them. And the best way to do that is by promoting more retirement savings.”

This was stated in the first public hearing held in the Seventh Committee of the Senate on this reform.

Asofondos repeated her call for an open, in-depth and, above all, responsible discussion about this project.

The union representing the AFP sector, which manages the savings of more than 18 and a half million workers, has put forward a set of principles that should support the reform and what the new pension system will be.

The protection of workers’ savings should be one of these principles, since, given the aging population, the reform must be based on savings to be sustainable.

Montenegro recalled that today the pension funds accumulate huge savings owned by the employees; the amount reached a new maximum of $ 366 billion at the end of March last year.

“The pension funds continue to save, despite the transfers caused by the subsidies to the wealthy of Colpensiones,” he stressed.

And he emphasized the importance of “the savings remain the property of the workers”, adding that “subsidies or subsidized pensions of others should not be paid with the workers’ money”.

Asofondos suggests keeping individual accounts so employees can see their resources grow (today nearly 70% of total savings are the product of profit).

Montenegro said that while the government project proposes a public savings fund, it will not make it and “there would be many risks of political management and expropriation. The ISS experience was disastrous.”

In addition, there is a risk that the fund will only invest in thermal energy storage in order to finance the government in power with all the costs that it incurs.

“Concentrating investments in one type of asset concentrates risk and reduces the chance of better returns,” he added.

For Asofondos, freedom of choice cannot be curtailed, as employees must retain their right to choose who manages their money.

In fact, in order to have a greater supply, the union proposes to “increase competition with public administrators and also private administrators”, in both cases with individual capitalization and identical rules of the game.

And Montenegro added that “at the time of retirement, the elderly should also have the freedom to choose the type of pension they want, between an annuity or a scheduled withdrawal.”

The union stressed that there are positive points in the official project, for example the unification of the two regimes in one system, the abolition of part of the subsidies to those who earn the most and the expansion of the base of beneficiaries of a solidarity income. , with an amount that exceeds the poverty line.

Likewise, the creation of the semi-contributory pillar for those who do not meet retirement requirements is highlighted, “which guarantees a lifetime income in old age, although the way to encourage more savings should be analyzed so that the amounts of income are greater ”.

He pointed to the introduction of a maternity allowance for women.

Asofondos stressed the importance of continuing to open space for discussion such as this one, led by the Seventh Committee of the Senate, as “it is essential that the discussion is broad, open to different sectors, and public and transparent to Colombians, as in At the moment his retirement future is under discussion.”

Source: El heraldo