Colombian presidential candidates agree on the need for pension reform | world news

CARTAGENA (Reuters) – The candidates most likely to win Colombia’s presidential elections on Friday agreed on the need to reform the country’s imbalanced pension system so that it provides better coverage for millions of poor people and redirects subsidies.

Ideas for funding reform ranged from sweeping tax reform to more sweeping plans such as using savings from private funds to pay the pensions of older people who have failed to save enough for retirement, among others.

Colombia’s public pensions are beset by the need to expand coverage while facing a shortfall of more than $11.3 billion a year that the government must cough up to ensure payments to the 2.4 million people affiliated with the system.

Left-wing candidate Gustavo Petro, who is leading the election polls, has proposed using retirement savings from private funds to help fund public system pensions and pay bonuses to some 3 million people who don’t have enough for their retirement.

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Private pension funds manage assets worth around $92 billion, or almost 30% of the country’s annual gross domestic product (GDP).

According to Petro’s manifesto, the right to retirement “will be a collective state guarantee based on social solidarity and not on the private appropriation of profits to the detriment of the savings of all Colombians”.

The proposal has raised fears among economists.

Second favorite Federico Gutierrez, a center-right candidate, has proposed keeping the mixed public-private system while eliminating subsidies worth $5.3 billion for high-value savings funds and redirecting them towards those who have no pension.

“There are big reforms that are absolutely necessary,” Gutierrez told the annual congress of the association of pension funds Asofondos in the Caribbean city of Cartagena.

“Big reforms have to happen in the first year,” he added.

Centrist candidate Sergio Fajardo has offered to support the 3.6 million adults over 65 without pensions or income with payments worth around $133 a month.

The plan would require some $4.79 billion to fund and Fajardo, who is fourth in the polls, would fund the move by pushing an $8.78 billion worth of tax reform through Congress, he said. he declares.

“People can’t take it anymore,” Fajardo said, acknowledging citizens’ dissatisfaction with the pension system.

(Reporting by Nelson Bocanegra; Writing by Oliver Griffin; Editing by Diane Craft)

Copyright 2022 Thomson Reuters.

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