If you are live and work in Colombia, you are entitled to a pension.  You and your employer are required to contribute to the pension fund in Colombia.  Read on for a guide to pension funds in Colombia, including what you and your employer must contribute, how your pension earns money, and how you can get your pension money in Colombia.

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Stacks of money with plants growing out of them growing from left to right, a representation of how cesantías in Colombia function.
Your pension in Colombia grows over time.  Image Source:  Pixabay

Pension Funds in Colombia

If you are employed in Colombia, by law you and your employer must make contributions to a retirement or pension fund.

In this article, we will give you a full run down of how the pension system in Colombia works and what you and your employer are required to contribute to your retirement account in Colombia.

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What do you have to contribute to your pension fund in Colombia?

If you are employed, you must contribute 4% of your ingreso base de cotización to you pension fund.  Your ingreso base de cotización is either your salary or your salary plus 40% of your income that is not considered salary.

So for example, I receive a housing allowance where I work that is not considered salary for purposes of prima or cesantías, so I have to contribute 4% of my salary plus 40% of that allowance.

Your employer must contribute another 12% of your ingreso base de cotización to you pension fund.  That means a total of 16% of your salary is deposited into your pension in Colombia.

Let’s imagine you earn 2,000,000 pesos plus 2,000,000 in housing allowance, the table below will show what you and your employer contribute to your pension fund in Colombia.

IncomeDeductions
Salary: 2,000,000Fondo de Pension: 112,000 4% of 2,800,000 (2,000,000 + 40% of 2,000, 000)
Housing Allowance: 2,000,000
Total Income: 4,000,000

What is fondo solidaridad?

If your ingreso de base de cotizacíon is more than 4 times the legal monthly minimum salary (in 2018, 3,124,968 pesos), you also contribute 1% more in tax to the Fondo de Solidaridad, the subsidized public pension fund.

Note if you are self-employed or an independent contractor, then you must pay the full 16% of 40% of your income for your pension in Colombia.

How Does the Pension System in Colombia Work?

There is both a public and a private pension fund system in Colombia.  I’m going to briefly explain the public system first, and then I will explain the private public pension system in Colombia that most expats will probably use.

How does the public pension system in Colombia work?

The public pension system in Colombia is called Colpensiones, this is called the Régimen de Prima Media.  This public pension system in Colombia is subsidized.

Under this public pension system, if you meet a certain number of required weeks of contributions, you are paid out a pension based on your ingreso base de cotización for the last 10 years you were contributing.

To be honest, I’m not sure if non-Colombian citizens can be a part of the public pension system in Colombia (I am in the private).  It tends to get better interest rates, however you must meet the minimum number of weeks to be eligible to retire.  If you do not meet the minimum number of weeks, you will only be given back the money you have paid in without any interest.

On the flip side, if you do meet the weeks, your pension is subsidized if need be based on your income for the last 10 years of your work life.  There’s much debate amongst Colombians themselves whether it’s better to be in the public or private system precisely for this reason.

How does the private pension system in Colombia work?

If you are an expat, then you are probably in the private pension system, known as the Administradoras Privadas de Fondos de Pensión.

In this case, the same amount is deducted for your paycheck and your employer must contribute the same amount to your pension.

You also have the choice of putting it into one of three funds, called multifondos:

  • You can put it into the conservative fund (fondo conservador).
  • You can put it into the moderate fund (fondo moderado).
  • You can put it into the high risk fund (fondo de mayor riesgo).

You must put all your money into only one of these multifondos.  You should be able to choose which fund you are in from your pension companies website.  Ask your employer with which company they opened your account.

Once you reach a certain age, it does automatically put a percentage in the conservative fund.

If you don’t choose a fund to be in, you are automatically enrolled in the moderate fundIf you’d like to change it, note you can only do so every 6 months.

You can consult the interest rates for the last 5 years for each of the pension funds here.

It’s worth noting that there are minimum interest rates legally declared by the government for every 5 years (that’s to say you can lose money for a short time but not overall for 5 years, at least in theory)

You should receive a quarterly report by email or paper mail on how your pension has done every 3 months.  Since they only truthfully update the rates for every 5 years, it’s not the most transparent, but it’s fun to see how much interest you’ve earned.  Plus, at least on mine, they give you a cool pie chart that shows the percentage split between the contributions and the interest, and it feels good when you start to see the interest slice grow.

A stack of coins with a clock in the background representing how you earn cesantías over time in Colombia.
Your pension in Colombia grows over time.  Image Source:  Pixabay

How Do I Get the Money From My Pension in Colombia?

You can only get the money from your pension fund in Colombia once you have reached the minimum number of weeks paid (1,300 weeks or approximately 26 years) or the minimum age for retirement (57 for women and 62 years for men).  Technically in the private system, you can retire at any age and your pension will be based on the money you have paid in.  However if you meet the 1,300 weeks they will guarantee at least a minimum wage pension.  In the public system, your pension is based on what you have paid in the last 10 years if you meet the required number of weeks and the required age.

There you have it, a guide to the pension system in Colombia.  I hope you have found this guide informative and helpful.


Interested in learning more about pensions in Colombia?

This Post Has 16 Comments

  1. Georg

    This is very helpful information, thank you!
    One question remains: If my Colombian contract ends after one year of employment and I deicde to return to my home country (not Colombia!), is it possible to get a payout of the pension contributions made during this 1 year of employment or is that money lost?

    Thanks so much for sharing all this important info!

    1. Hi George, Glad it was helpful!

      Unfortunately, I’m probably going to disappoint you with my answer to your question, because I’m not clear on it either. I always understood you can’t get it until you reach the age, however, recently I’ve heard of people getting it. Some of those people said they simply arranged it with their pension company and some said you can do it if you know the right people. So, I’d recommend asking first at HR at your company to see if they know any way to get it, and then go to the pension company where you’re affiliate and ask them if there is any way to get it.

  2. Curtis Penner

    Hi, would you have any info on how it works as a self-employed business owner? Are the percentages the same, and also have the percentages changed? I’ve heard that contributions are now up to a total of 40% – 20% from the employer and 2₩% from the employee. The person I spoke with said it’s because the pension fund is in financial trouble.

    Thanks for the article. I didn’t know there was a private and public.

    1. Hi Curtis. You would have to confirm this with a lawyer and/or accountant but my understanding from when I researched the article is you would pay the 16% on 40% of your income. There has been talk about changing the law because the fund is probably not financially sustainable as is. What I get deducted and what my employer contributes has definitely not changed though so I would not think it has for the self employed either.

  3. Sarah

    If an employee moves from one employer to another, how is the transition communicated to the private DC plan provider?

    1. Hi Sarah, I’m not sure which one or if both notify them. My experience is employers usually have their preferred company they enroll new employees in but if you are coming from another job they will keep you where you are. It may just be that one stops paying and the other starts.

  4. Eric

    Hi, thank you for this interesting article. Do you know how is the taxation in Colombia of pension received from abroad, and in particular when you receive a lump sum from your pension fund located abroad ? Thank you

    1. Hi Eric. Honestly, I’m not entirely sure. I believe that yes, it has to be declared as income if you qualify as a tax resident of Colombia (here over 180 days a year or have residency). But I can’t tell you for sure or how/at what rate it is taxed.

  5. Chad Wilson

    If I am an American Citizen working for an American Company but Live in Colombia with a Spouse Visa, do I have to pay taxes or to a pension program. This is my first time out of the country and especially living in another country and I want to make sure I know the system. In other words who do I Pay. HaHa

    1. Chad, this is a good question, that I honestly do not know the answer to. Is your position one that is remote and you could live anywhere, or is it a job post specifically in Colombia? If it’s the latter, I would ask someone in HR, but I would think they should take care of it. If it’s the former, I really don’t know. Do you qualify as a normal employee and it is the business’s job to register, deduct your share, and pay theirs? Do you qualify as in independent worker and are responsible yourself? If your employer has another retirement plan based in the US, do you have to pay into a Colombian one at all? I can see reasonable arguments for all of the above. I would ask HR, possibly you could reach out and ask in some of the expats in Colombia Facebook groups if someone knows, and finally it may be worth trying to and ask someone who works in HR or Accounting, preferably in a multinational. Hope you get it sorted!

  6. Natalie

    I have a question. I am both an Australian and Colombian citizen, I am living in Colombia and not currently employed. Therefore independent. I am attempting to register myself with EPS and a complementary plan and thus would only like to pay for salud and the complementary plan. Can I be exempt from paying pension?

    1. Hi Natalie, I am not an expert on this but yes you should be able to register for eps and not pay pension if you are unemployed. I am not sure if dual citizenship makes a difference or not but you should also be elgible for subsudized eps but I dont know about how to set that up.

  7. Kelly

    Hi, I am a Colombian citizen and live in the US I was thinking in starting to contribute to pension in Colpensiones. I work for an employer here in the US, do I have to declare my salary and am I considered “independent” by Colpensiones? Can I decide how much I contribute to the fund?

    1. Hi Kelly. You would have to confirm this with an accountant, but I believe you can do contibuciones voluntarias for the amounts you choose, but I’m not 100% sure. I’m also not 100% sure if that applies for Colpensiones. One thing to keep in mind is that if you don’t meet the number of weeks cotizadas in Colpensiones when you are ready to retire, you will only get back your contributions and not the interest gained. I am not sure if doing contributions from abroad qualifies, you’d have to check. I’d be very curious to know what you find out if you’re willing to share with us when you do!

  8. Mario Orrego

    I have a question. I worked in a company in the United States that had a pension plan for its workers. 10 years ago I left the company and came to live in Colombia. A few days ago I made a claim for the pension and they tell me that They cannot send it to a bank outside the United States. Is there any way to receive the money from that pension in Medellin, Colombia?

    1. Hi Mario. Honestly I don’t know. If they can’t send it to a bank outside the US, you may have to first put it into a bank account in the US before wiring it into one in Colombia. Perhaps there’s a way to do like a cashier’s check, but that’s something you’d have to both ask them and the banks here if they will accept. Hope you are able to sort it.

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