How to Pay the Pension: Contributions, Administrators and MORE

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If you end your work time, that is, it is time to retire from your work, it is necessary that you process the pension, but doing this involves knowing certain data and certain information, for example: How to pay the Pension.

That, how much to contribute and which are the best recommended administrators in Colombia and more, we will tell you here. Let us begin!

What is the Pension?

In order to answer the question of How to pay the Pension It is first important to know that the pension is an economic benefit that workers, be they independent or dependent, receive each month when they have to request their retirement from work. Based on the contributions they made to a fund of Compulsory pension during the time they worked.

How much do I have to contribute to pay the pension?

It all depends on what type of worker you are. It is explained below:

  • Independent worker: The following is an example, this worker has a monthly income of $ 1,200,000 and wants to join a General Pension System. You must make the payment through the Integrated Contribution Settlement Worksheet (PILA). The contribution to be made is calculated as follows:

Calculating the Contribution Base Income or IBC, corresponding to 40% of the monthly income.

$ 1,200,000 × 40% = $ 480,000

From this result, 16% is calculated, which is the percentage that must be contributed to the pension.

$ 480,000 × 16% = $ 76,800.

This result is the total to contribute to the pension.

IMPORTANT
According to Law 1955 of May 25, 2019, the contributions made to the Social Security of the contractors (contributors 59) are maintained. This means that each contractor can make the contribution without the contractor being forced to withhold those contributions.
  • Dependent Worker: The following is an example again, this worker has an indefinite contract and his monthly income corresponds to $ 1,200,000. The calculation of your contribution is done like this, taking into account that the contractors pay 12% based on salary and the worker, 4%:

$ 1,200,000 × 12% = $ 144,000 ← What the worker pays.

$ 1,200,000 × 4% = $ 48,000 ← What is deducted from the worker.

REMEMBER
When the pension payment is made, not only is the payment assured once the age and required weeks are reached, protection is also granted in the event of an accident throughout the remaining work time.

Pay the Pension Abroad

Citizens with Colombian nationality who are residing abroad, may contribute without having to pay EPS, since it is assumed that health is covered in the country of residence. That’s how it is How the Pension is paid abroad.

At Colpensiones, the most popular Colombian pension administrator in that country, it offers two payment options for people of Colombian nationality who wish to join the program from abroad.

  • Introduce Single Integrated Worksheet (PILA) and explain that he is a Colombian living abroad. If you are affiliated with a private banking institution, the PILA collection is mandatory and with the same explanation.
You must have an active account in a Colombian bank, since this is where the corresponding amount will be discounted each month.
  • Branches of Western Union, with QuickPlay formats for errands.

Pension Administrators in Colombia

In Colombia, there are The Pension and Severance Fund Management Companies. These are private financial institutions of a social security nature that are in charge of managing funds and pension plans of the Individual Savings Regime with solidarity and severance funds.

The AFP Their main objective is to offer efficient management of mandatory, voluntary and severance pension funds belonging to Colombian citizens making use of savings plans that represent a benefit.

Comprehensive Social Security System in Colombia

The law that created this system is the Law 100 of 1993. It includes several accessible and public institutions, norms and procedures for the general population in order to guarantee a better quality of life.

It is the one that authorizes the creation of Pension Fund Management Companies, which would be those that really manage the payment resources of the affiliates’ pensions, based on the conditions in which each one legally operates that works for the How to pay the Pension.

In 1990, the Law 50 modernized the labor code, with rules regarding individual relations between worker and employer seeking justice and balance for all parties involved. From that moment on, the layoffs have new conditions that turn out to be more favorable for the job stability of Colombians.

The AFP Most importantly, those authorized to manage citizens’ pension and severance funds are:

  • Protection SA: It is one of the fastest growing and most popular pension administrators, offering innovative products that focus on the needs of its members. They are the leaders in the field of Private Pension Regime in Colombia.
  • Porvenir SA: Created in 1991 as a severance fund. In 1994 it was consolidated in an alliance with the AFP Provida SA of Chile, to start operating with a private mandatory pension fund. Provida remained until the end of 2003.
  • Colfondos Pensiones y Cesantías SA: Limited company belonging to Individual Savings Scheme with Solidarity (RAIS). It has a corporate strategy with strict governance and internal control practices.
  • Old Mutual Pensiones y Cesantías SA: Management company founded in 1991, in charge of mandatory, voluntary and severance pension funds. It is one of the most acclaimed.

Services offered by the AFPs

The services offered by AFP are as follows:

  1. Mandatory pension: Payment obtained by members of the General Pension System. Its purpose is protection.
  2. Voluntary Pension: Voluntary savings. It is a periodic payment investing capital safely and productively.
  3. Severance payments: Mandatory social benefit that must be paid every year by the employer. Corresponds to one month of work for each year worked and recorded by the Severance Fund to which the employee is affiliated.

In general, they represent the solution for all those who want to obtain the best profitability for voluntary, mandatory and / or severance pension funds with different savings and investment systems that are beneficial in the long term for the client.

Single Contribution Settlement Worksheet (PILA)

To answer the question of How to pay the Pension, it is necessary to know that the Integrated Contribution Settlement Worksheet (PILA), is a system that allows all contributions to be made to the Comprehensive Social Security and Severance System. This worksheet is essential to carry out the entire process successfully.

Frequent questions

  • Do pensions have a maximum amount?

The banks from which payments are made may have limits. According to Law 797 of 2003, the maximum legal limit is 25 times the minimum wage corresponding to the month.

  • What is the amount of pension payments received annually?

Pensioners will receive 13 payments per year: twelve monthly payments and an additional one in December.

The Law 100 in its article 142, I create an additional payment which would convert the amount of payments into 14The latter is received by pensioners for retirement, disability, survival and old age, delivered in June of each year without exceeding the amount of 15 minimum wages.

  • At what point is the first pension payment made?

If the pension is obtained in First 10 days of the month, the first payment is received the same month. On the other hand, if the payment is made on the 10th and 20th, the first payment will be received on the first business day of the month following the obtaining of the pension.

  • What is the form of payment of the pension?

Payment will be made through a electronic transfer and proof of payment is emailed the month after the payment was made.

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