Colpensiones vs. private fund under the new reform: how much will you get?

2 min read

  • Pensions
  • Colpensiones
  • Pension reform
  • Private pension fund

The biggest change: the 2.3 SMLMV threshold

Under Law 2381 of 2024, signed in July of that year and expected to take full effect on April 1, 2027, the Colombian pension system is no longer a choice between Colpensiones and a private fund. If your contribution base exceeds 2.3 SMLMV (approximately 4.03 million pesos based on the 2025 minimum wage), your contributions are split: the 16% on the first 2.3 SMLMV goes to Colpensiones and the 16% on the excess goes to your private AFP. Below that threshold, everything goes to Colpensiones.

How Colpensiones (RPM) calculates your pension

In the Defined-Benefit Regime, your pension is formula-based: between 65% and 80% of the average salary of your last ten years, depending on weeks contributed. You need at least 1,300 weeks (25 years of contributions) to qualify for a pension. Under the reform, women reduce that minimum to 1,000 weeks during a transition period until 2036, decreasing by 25 weeks per year starting in 2025. Women also receive a bonus of 50 extra weeks per child, up to three children.

How a private fund (RAIS) works

In the Individual Savings Regime, your pension depends on the capital accumulated in your account plus the returns your fund has generated. There is no fixed formula: if your balance at retirement age is enough to purchase an annuity greater than 110% of the minimum wage, you retire. Otherwise you can take your balance as a programmed withdrawal. Colombian funds have generated nominal returns between 7% and 14% in recent years, though past performance does not guarantee the future.

Transition rules if you are already contributing

People in the transition regime (women with 750 or more weeks and men with 900 or more weeks contributed when the law takes effect) continue entirely under Law 100. If you are not in transition, the new rules apply to you from April 1, 2027. Transfers between regimes remain possible every five years but are prohibited within ten years of retirement age.

Simulate your pension with the calculator

Use the pension calculator to project your estimated balance at retirement based on your salary, current age, weeks contributed, and the fund's historical return. Although the calculator works with a single regime at a time, you can run two simulations (one under the defined-benefit regime and one under individual savings) and compare the results. It is the starting point before consulting a financial advisor about your specific situation.

Simulate my pension

References

This note is not financial advice.

Colpensiones vs. private fund under the new reform: how much will you get? 路 Quantio