During a person’s working years, a portion of their income is set aside and invested in a fund that grows over time. This money can only be accessed after retirement, providing a stable income when they are no longer working. Pensions are essential for helping elderly people avoid poverty after they retire.

Elderly Poverty in Colombia

The South American country of Colombia has a population of approximately 50 million people, of which more than 7 million (14%) are above the age of 60. According to a study conducted by the Institute of Aging at Colombia’s Javeriana University, 28.4% of this population (or 1.8 million) are living below the poverty line. The study also found that more than one million people in this age demographic are “victims of Colombia’s armed conflict,” which has been going on for decades

Inflation during and after the COVID-19 pandemic has significantly impacted many countries, including Colombia. Since 2021, the inflation rate has grown exponentially, peaking at 13.34% in March 2023. While the current rate is much lower, the effects of inflation are still widely present. These effects are especially difficult for elderly people, who often rely on fixed incomes and have limited opportunities to increase their earnings.

In 2023, Colombia’s pension plan only covered 25.5% of the elderly population, according to Bloomberg Linea. This situation leads many older Colombians to extend their working lives, often taking on informal and poorly paid jobs. This is an issue that is more noticeable in rural areas

This is an issue that will continue to become more palpable over time. In 2015, only 10.8% of Colombia’s population was over 60. By 2050, that number will increase to 27.5%

Passage of the Law

While Colombia’s pension reform was a significant issue for years, it became the forefront of Colombian politics in 2022 with the electoral success of Gustavo Petro to the presidency. During the campaign, he promised many social reforms, including pension reform.

His promise came to fruition when the Colombian Congress passed the pension reform bill in June 2024, which came into effect in July 2025. Specifically, this new law aims to strengthen the state pension fund, Colpensiones, by requiring individuals who earn less than $800 per month to contribute to the public fund. It also guarantees payments for older adults who have insufficient retirement savings or none at all. The government estimates that approximately 2.6 million older Colombians will benefit from these expanded payments, providing long-overdue financial security to a vulnerable segment of the population

New Pillar System

The reform also establishes a new “pillar system” that focuses on increasing coverage and efficiency. It divides pension contributions into different pillars based on income levels, thereby encouraging higher-income earners to contribute to private savings while ensuring lower-income workers receive support from the public system. This structure aims to make the overall pension system more inclusive and reduce inequality among retirees.

Additionally, one of the primary objectives of Colombia’s Pension Reform is to combat elderly poverty by offering a guaranteed minimum monthly payment to retirees who did not meet the required weeks of contributions under the old system. This helps ensure that aging citizens who worked informally or intermittently have support in their later years.

While implementation will require significant coordination and public education, the reform is a step toward creating a more equitable retirement system in Colombia.

– William Brentani

William is based in San Francisco, CA, USA and focuses on Politics for The Borgen Project.

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