Colombia pension reform is unlikely to pass intact

Significance

Spearheded by Labour Minister Gloria Ines Ramirez, the 'Change for the Elderly' bill proposes a new system, centred on the principle of solidarity. Critics claim the proposals will have a negative impact on national savings, fiscal sustainability and capital markets. Previous attempts at pension reform by former Presidents Juan Manuel Santos (2010-18) and Ivan Duque (2018-22) failed.

Impacts

• The reform would partially correct the inefficiency of public spending on pensions by ending subsidies for larger pensions.
• A lack of constitutional safeguards against shocks for the financial system and stock market will make the reform's approval less likely.
• The recent failure of political reform suggests political divisions will affect the government’s entire legislative agenda.