Updated: Mar 17, 2022
This article by Manuel Garcia-Huitron, co-authored with Carolina Gonzalez-Velosa and Oscar Becerra, is a technical note published by the Interamerican Development Bank.
Multiple studies have highlighted the urgent need to reform the Colombian pension system, and most of the discussion has focused on proposing the implementation of a reform option and supporting the advantages of this alternative. This document addresses a different perspective: it compares the main alternatives that have been presented in recent years to improve both the contributory system and solidarity programs and makes the dilemmas transparent in light of different policy objectives.
In addition, the document explores reform alternatives that improve the viability of retirement products and that can align the performance of pension funds with the long-term interests of the affiliates. Finally, options are discussed to create institutional capacities that strengthen accountability mechanisms and facilitate the adaptation of the system in the future.
The reform avenues discussed throughout the document have different benefits and costs depending on the objectives. Therefore, the choice of an option will depend on the type of social contract around which there is a consensus as a country.