Millions of Colombians Face Two New Fees on Their Pension Fund Savings

(Bloomberg) -- Millions of Colombians will need to pay two new fees on their pension savings according to latest draft of the pension bill sent to the Lower House on Friday.

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Lawmakers modified the bill to allow fund managers to charge a fee of as much as 2% on profits, while also retaining a controversial annual fee of up to 0.7% on assets under management. Currently, so-called obligatory pension funds charge a fee upfront, but nothing after that.

Read more: Petro Calls on Colombian Congress to Kill Proposed Pension Fee

Congress defied calls by President Gustavo Petro to push more savings automatically into the public system. Workers earning 2.3 times the minimum wage per month or less will be obliged to contribute to the public system, according to the latest draft, whereas Petro had wanted to lift this threshold to 4 times.

Petro has repeatedly criticized private pension funds, claiming that their returns are too low, and that they should repatriate money invested overseas.

The so-called obligatory pension funds covered by the changes had 405 trillion pesos ($106 billion) under management at the end of 2023. Asofondos, the lobby group that represents the pension fund industry, estimates that the reform will apply to about half of those assets.

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