Compare

Social Security / Healthcare / Other Required Benefits in Colombia

1. Legal Framework

Law 100 of 1993 and Decree 1072 of 2015

Under Colombian current labor and social security legislation, every employer is required to register itself and its employees before the social security entities, such as (i) health promoting entities (EPS), Pension Funds (AFP), labor risks entities (ARL) and family welfare funds (cajas de compensación familiar).

2. Required Contributions

Social Security System Contributions:

Employers in Colombia have the obligation to register all employees before the social security system, which covers health, pensions, and professional risks. Below please find a description of these systems:

a) Pensions:

Definition and contribution percentage ▪ It is a monthly payment equivalent to sixteen percent 16% of the monthly salary earned by the employee.
Paid by Employer – 75% (12%)
Employee – 25% (4%)
Fellowship fund (Fondo de solidaridad) Employees who earn more than four (4) monthly minimum wages are required to make this contribution, which ranges between 1% and 2% of their average income.
Contribution base ▪ The quotation base is the last monthly salary.
▪ The quotation base for employees who earn an integral salary is equivalent to 70% of their monthly salary
▪ The minimum quotation base is one monthly minimum wage, and the maximum is 25 monthly minimum wages.

b) Health:

Definition and contribution percentage It is one monthly payment equivalent to 12.5% of the monthly salary earned by the employee
Paid by Employer: 8.5%
As of January 1, 2014 employer´s contribution to the health system (8.5%) for employees earning less than ten minimum monthly salaries1, have been eliminated.
Employee: 4%
Contribution base ▪ The quotation base is the last salary.
▪ The quotation base for employees who earn an integral salary is equivalent to 70% of their monthly salary
▪ The minimum quotation base is one monthly minimum wage, and the maximum is 25 monthly minimum wages

3. Required Maternity/Sickness/Disability/Annual Leaves

Employees are entitled to paid leave for:

  • bereavement leave (5 days),
  • sick leave,
  • paternity leave (8 days)
  • maternity leave (14 weeks)

4. Mandatory and Typically Provided Pensions

There are currently two (2) pension regimes in Colombia which are mutually exclusive but coexist: (i) the average premium with defined benefit regime (hereinafter “RPM” per its name in Spanish); and, (ii) the individual savings with solidarity regime (hereinafter “RAIS” per its name in Spanish); these regimes as characterized by:

  1. RPM: In this regime, the affiliates’ contributions and their yields are part of a common fund of public nature, which guarantees the payment of benefits to those who qualify as pensioners every financial year. To obtain an old age pension in this regime, according to article 9 of Law 797 of 2003, which modified article 33 of Law 100 of 1993, the affiliate, if female must have fifty-seven (57) years of age and if male sixty-two (62) years of age and have contributed one thousand and three hundred (1,300) weeks.
  2. RAIS: This regime is based on the savings from the contributions made by affiliates and their corresponding yields. To obtain an old age pension in this regime, pursuant to article 64 of Law 100 of 1993, affiliates can retire at the age they wish provided that the accrued capital in their individual savings account allows them to obtain a monthly pension higher than 110% of the monthly minimum wage in force.

1 Ten minimum monthly salaries for 2016 are COP $ 6,894,550 approximately USD $2,254 (at an exchange rate of COP$ 3,058).

For more information, please contact L&E Global.
This entry was posted in Social Security, Benefits and Pensions on and modified on .