Colombia announced over the weekend that it’s seeking to study possible pension reforms to head off what the country’s President called a “pension time-bomb”. Colombia is asking international economic organizations to help with the study.
From Reuters:
Finance Minister Mauricio Cardenas will request that the Inter-American Development Bank and the Organization for Economic Cooperation and Development conduct the study, [Colombia President] Santos said at a business conference in Cartagena.
“I have given him instructions to start an in-depth study about the possibility of pension reform,” Santos said, referring to Cardenas.
The announcement comes amid calls from pension funds and insurance industry groups for the government to reform the pension system, which they say is unsustainable.
Colombia is confronting a “pension time-bomb” according to Santiago Montenegro, the president of the Asofondos pension group, as only 7.5 million of 21 million workers currently make pension contributions, a figure which points to labor market informality of close to 65 percent.
Colombia has budgeted 34 trillion pesos ($16.6 billion) for pensions in 2015, some 4.1 percent of gross domestic product.
The education and defense sectors contribute the most to pension funds, with 28.9 trillion and 28.2 trillion respectively.
The country pays monthly pensions to 1.9 million people.
Photo by Pedro Szekely via Flickr CC License