Colombia Statutory and Private Employee Benefits, 2023 Update

Colombia Statutory and Private Employee Benefits Overview

Colombia has a basic social security system with low coverage and participation. The country’s social insurance system was initially introduced for public sector employee groups only. Private sector employees secured coverage in 1946. Pension benefits were introduced with the creation of the Social Security Institute (ISS) in 1967. However, the ISS faced problems immediately due to low coverage and participation rates. To overcome this problem, the government created a new social security system through Law 100 of 1993. The law introduced a dual public-private competitive pension system – Régimen de Prima Media or average premium scheme (RPM), and the Régimen de Ahorro individual con Solidaridad, or individual savings system with solidarity (RAIS).

In 2012, the administration of RPM was transferred from ISS to Colpensiones, a state-owned financial institution supervised by the Ministry of Labor, due to problems with debt and inefficiency. Private sector employees can choose between RPM and RAIS and have the option to change their membership once every five years. For self-employed and unemployed individuals there is a voluntary regime. Armed forces, police, and teachers have their separate systems.

The Colombia employee benefits report provides in-depth industry analysis, information, and insights into employee benefits, an overview of the state and compulsory benefits, detailed information about the private benefits, insights on various central institutions responsible for the administration of the different branches of social security and the regulatory framework of the employee benefits in Colombia.

Employee Benefits Regulations in Colombia

The chief laws that govern employee benefits offered in Colombia are:

• The General Pension System, 1993
• Social Insurance, 1994
• The Family Pension, 2012
• The Social Pension, 2013
• The Beneficios Económicos Periódicos (BEPS), 2014

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Colombia Employee Benefits Segmentation by State and Compulsory Benefits

The key state and compulsory benefits offered by employers in Colombia are retirement benefits, death in service, long-term disability benefits, short-term sickness benefits, medical benefits, workers’ compensation insurance, maternity and paternity benefits, and other benefits.

Retirement Benefits: The Ministry of Labor (Ministerio de Trabajo) and Colpensiones regulate Colombian retirement benefits. These benefits are covered by social insurance, individual accounts, and social assistance systems. Employees can opt between social insurance and individual accounts and change their membership once every five years up to 10 years before retirement. Colpensiones also manages a new subsidized pension program for low-wage earners, Beneficios Económicos Periódicos (BEPS) or Periodic Economic Benefits. This is a complimentary social service designed for workers who earn less than the minimum wage and do not qualify for either a public or a private minimum pension scheme.

State and Compulsory Benefits in Colombia

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Colombia Employee Benefits Segmentation by Private Benefits

The key private benefits offered by the employers of Colombia are retirement benefits, death benefits, medical benefits, disability benefits, accidental death and dismemberment benefits, and other benefits.

Medical Benefits: Employers in Colombia usually provide medical benefits under group health insurance policies. Three types of medical plans are available in Colombia: Self-administered plans (by large companies), pre-paid medical plans hospitalization, and surgical plans. Generally, companies with more than 15 employees provide group medical benefits. The medical benefits are provided under group life and personal accident policies by the employers. Some employers provide a global health plan, which provides medical coverage to employees during their travel. Additionally, a few large employers provide overseas group health insurance plans.

Private Employee Benefits in Colombia

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Scope

This report provides a detailed analysis of employee benefits in Colombia –

• It offers a detailed analysis of the key government-sponsored employee benefits, along with private benefits.
• It covers an exhaustive list of employee benefits, including retirement benefits, death in service, long-term disability benefits, medical benefits, workmen’s compensation insurance, maternity and paternity benefits, family benefits, unemployment benefits, long-term care benefits, leaves and holidays, and private benefits.
• It highlights the economic and regulatory situations relating to employee benefits in Colombia.

Key Highlights

• The general protection system in Colombia consists of a system of social security and welfare

• The Colombian social security system offers contributory and non-contributory benefits to vulnerable people in society

• A person’s national insurance contribution is determined based on their income.

• An insured person who is unemployed or unable to work and whose benefits have been exhausted is entitled to credited contribution.

• In Colombia, employers provide voluntary retirement benefits to their employees through trust companies, insurance companies, and Administradoras de Fondos de Pensiones (AFP)

Reasons to Buy

• Make strategic decisions using in-depth information related to employee benefits in the country.
• Assess employee benefits of the market, including state and compulsory benefits and private benefits.
• Gain insights into the key employee benefit schemes offered by private employers in the country.
• Gain insights into key organizations governing the employee benefits market, and their impact on companies.