The General Pension System in Colombia is made up of two mutually exclusive and competing solidarity schemes. The Individual Savings with Solidarity Scheme (RAIS) or Private Scheme and the Average Premium with Defined Benefit Solidarity Scheme (RPM) or Colpensiones.

Each one has specific rules on pension eligibility, which are decisive for access to a pension. The worker's choice of scheme is free, voluntary and flexible. In most cases, it is the companies' hiring departments that induce workers to choose the fund of their choice. They induce workers to choose the fund of their choice, without any real advice.

The schemes allow transfers between them under certain clearly defined conditions.

This uniqueness of the Colombian system generates a valuable option for members, as it allows them to make corrections on past decisions. Even among the same private funds, transfers can be made by changing from one administrator to another with the intention of improving service and capital saved.

These transfer options are an excellent alternative when choosing the pension scheme that suits you best.

Between 2019 and 2020, nearly 180,000 members from the entire General Pension System were transferred from the RAIS Private Funds to the RPM Colpensiones.

Under the assumption of rationality and with excesses of optimism, Colombians make their decisions based on a double obligatory pension advice given by the two regimes, in search of the best pension alternative.

For members, the application of this option is voluntary and does not guarantee improved retirement prospects for all.

Each scheme offers benefits that, if well applied in our working life and future, can lead to a very optimistic outlook for our old age. Depending on our contributions, our job prospects and our beneficiaries.

It is worth remembering that we are also protected against disability and death by being members of compulsory pensions.

The member benefits from the transfer option if, by exercising it, he/she switches to the scheme with the best offer of future pension benefits for his/her particular case.

The worst enemy of the Colombian pension system is unemployment, informal employment and the low awareness and importance of the subject.

Depending on the country situation and scheme rules, 95% of pension contributors in Colombia are better off opting for a pension in a private fund.

We live in a world where everything happens in real time, immediately, right now. That is why the idea of the future has become diluted, as if it will never come, and we do not tend to think that after today there will be many days and years, with which new responsibilities (for example, the education of children) and aspirations (such as buying a house, travelling or taking a break from work, a sabbatical period) will come to us.

And if we are young, much less do we think that one day we will no longer have the same strength and desire to work because time will have passed and we will be old. Pensioning, for young people, is something so far away that it seems surreal, a future that does not exist and, therefore, is not considered.

However, time goes fast and the more time passes, the more difficult it will be to raise money for your new obligations, fulfil your wishes or retire. So in real time, now, you need to start planning and building your future.

Fortunately, you can resort to various savings plans, including one that is very innovative because it can be linked to your pension contributions and has tax benefits. This is an insurance that covers your life and your voluntary retirement, in which each month you contribute an amount of money (premium) to complete a specific amount in a specific period of time, after which you will be reimbursed with interest.

In other words, with this insurance you set yourself a savings goal, which you make in monthly instalments for a certain number of years, and while you are saving you also earn interest and have your life covered; when you complete the goal and the term, you receive your money with interest. Thus, it allows you to build up a planned long-term reserve (between 10 and 25 years), which you can draw on before you retire, to invest it in a defined objective from the start.

In addition, if you die before completing the term you set out to save, your chosen beneficiaries will receive the total of your savings goal; if you become permanently and totally disabled, you receive the money; or if you retire and have met your goal, you also enjoy a refund during your lifetime.

With so many advantages of this insurance, it's well worth starting to think about your future today. What are you waiting for?

Nobody's life is bought, goes a popular saying, and when one member of a family dies, the impact on the others is immeasurable. Not only on an emotional level, but also financially if that person was dependent on others, such as children, parents, partners.

That is why, if your loved ones depend on you financially, it is so important that you have something certain to leave them. If you are filthy rich and you keep your fortune, you can rest assured that they will have everything when you are gone. But if you are not, you should at least have life insurance and be contributing to a pension. So if you don't have one or the other, now is the time to get them.

By law, contributions to the pension funds of a person who dies protect his or her loved ones, provided that the deceased has contributed for at least 50 weeks during the last three years of his or her life. These family members are beneficiaries and can receive a survivor's pension, every month, as follows:

• For life: spouse (permanent partner, over 30 years of age or who had children with the deceased) or parents (if the person did not have a spouse).
• Temporary: minor children, children up to the age of 25 if they are studying, disabled children of full age. If the deceased had no eligible children, spouse or parents, the temporary pension may be awarded to an invalid sibling for as long as the invalidity condition persists.

In contrast, when a person takes out a life insurance policy, he or she is free to choose his or her beneficiaries, there are no restrictions on age, relationship, or disability; all he or she has to do is provide full and accurate names and identification numbers, and determine a percentage for each. Thus, upon death, the beneficiaries receive the money as the person decided.

Another popular saying is that it is better to be safe than sorry, but when you die you are no longer able to be sorry for anything, so the best thing you can do now, while you are alive, is to ensure that the people you adore and depend on you can get on with their lives, without any major setbacks other than the pain of your absence.

In Colombia there are two pension systems that make up the General Pension System, as follows:

• Régimen de Reparto o de Prima Media (RPM), administered by Colpensiones.
• Individual Savings with Solidarity Scheme (RAIS) managed by: Colfondos, Old Mutual, Porvenir and Protección.

One of the great benefits of private pension funds is that they the money can be passed on to other persons who are not on the list of beneficiaries of the Law..

Both in private pension funds and in Colpensiones, when a member dies, the family members provided for by law (partner of more than 5 years of cohabitation, children under 25 years of age, siblings or children with disabilities or economically dependent parents) can obtain a survivor's pension. This is only if the insured person contributed for at least 50 weeks during the 3 years preceding his death.

In pension funds, if the member does not have any of the following beneficiaries from the list above, you have the option of inheriting your pension to relatives up to the fifth degree of consanguinity. That is, cousins, aunts, uncles, nephews, nieces and nephews, among others.

The same applies if the deceased is not a member but a pensioner, the balance accumulated in his Pension Savings Account can be given to the heirs up to the fifth degree of consanguinity.

On the other hand, in Colpensiones, if the member or pensioner does not have legal beneficiaries, the money re-enters the pension system and cannot be inherited.

This depends on several factors: your current age, the age at which you want to stop working and the amount of money you contribute each month to the pension fund as an employee or self-employed person.

In Colombia, regardless of the type of pension fund to which they are affiliated, people can retire at a certain age: 57 for women and 62 for men. The only public fund in the country, Colpensiones, also requires 1,300 weeks of contributions. But in the private funds, such as Porvenir and Old Mutual, the weeks contributed are not considered, only the money that each person has saved.

A private fund operates on the basis of the individually funded system, in which everyone contributes to their own pension in a personal savings account, where the mandatory contributions established by law and the voluntary contributions that the member wishes to make go.

Moreover, in a private fund, individuals decide how to capitalise their savings so that they grow. That is why private pension funds offer their members to invest in portfolios of varying returns, depending on the risk. This means that in a private fund it is you who determines the pension you will receive, as it is up to you to decide how much you save each month and how you will invest it.
You can also choose which private fund you want to be in, as they are not all the same. When selecting one, you should look closely at how solid it is (for example, time in the market, economic group to which it belongs), how responsible it is in managing the investment portfolios (for this purpose there are entities that rate the funds and whose information is public) and how much profitability it has given and currently gives (this data is provided by the Financial Superintendency and the funds themselves).

A public pension fund operates on a solidarity basis, meaning that active workers contribute a portion of their income to support those who have already retired because of their age, with the promise that when they reach old age and retire, there will be others who will continue to contribute for them.

Usually, in order to maintain this scheme, public pension funds are backed by the state and make low-risk investments with very moderate returns. Here there is no possibility for members to decide how to capitalise their savings. However, the amount of the pension is pre-established, so they know how much they will receive.

An additional difference between the public and private pension fund is what happens to the contributions when the member dies. In both types of funds, if the member had a spouse, children (minors, disabled or students up to the age of 25) or dependent parents, their contributions will be converted into a survivor's pension and they will receive it. On the other hand, if the deceased did not have such beneficiaries, the public fund does not return the money contributed to anyone, which is the case with a private fund, where all contributions and their returns are inherited by family members up to the fifth degree of consanguinity.

Choosing a pension fund is a very serious matter because after retirement you may live for many years and you will need to have enough money. Can you imagine how much it will be worth to support yourself for 15, 20 or more years? You will need a huge capital and for that you will have to have a well-managed savings and investment plan.

If you don't know, you'll want to find out about this:

• The amount of money a pensioner receives each month is called the mesada pensional.
• When the pension is in a private pension fund, the pension allowance is calculated on the basis of the money that the person has in his/her individual account at the time of claiming the pension (what he/she contributed during his/her working life plus the returns he/she earned), i.e. all his/her savings in the fund.
• A fund's performance is the percentage of returns it earns from making investments. The higher the percentage, the more money you have earned because you have invested better.
• Pension fund performance drastically influences members' returns because if it is low, they get lower returns, and as it increases, the returns to members are higher.
• In short: the more money in your individual account, the higher the amount of your pension allowance, and you will have a large individual account if your pension fund has a higher return.