Social Security in Colombia
1. Social Security Systems in Colombia
Figure 1. GPS coverage rate
Source: DANE “Empleo informal y seguridad social”
Table 1. Pension System members from the total number of workers
2007 2008 2009 2010 2011 2012 2013 2014 (May)
PENSIONS 29,58% 30,48% 28,57% 29,16% 28,54% 30,36% 32,13% 35,18%
Source: DANE, “Empleo informal y seguridad social”3
“General Health system” (GHS)
This system is based on solidarity; there are two regimes, the first one for the people who have the financial capacity to contribute (contributory regime), and the second one for the population in poverty and marginal conditions (subsidized regime). The members of the contributory regime have access to health services, called “Compulsory Health Plan” (POS in Spanish). In addition, members have the option to acquire a Complementary Health Plan by paying an additional amount of money. Also, members of this regime have the opportunity to affiliate their relatives; they are known as contributive regime “beneficiaries”. The members of the subsidized regime have to make a minor contribution; they are beneficiaries from the solidarity scheme. As in pensions, the health system also has special regimes for some public enterprises or unions. The rest of the population – that is, the ones who are neither in the contributory nor the subsidized regime – only have access to health services to the extent of availability of monetary resources.
The official statistics in Colombia for May of 2014 show that 91% of the employed population has access to the health system in any regime. About 49% of workers are in the contributory regime while 39% of them belong to the subsidized regime.
3 DANE “Empleo informal y seguridad social” data is available at https://www.dane.gov.co/index.php/mercado- laboral/informalidad-y-seguridad-social
29.58%
35.18%
20%
22%
24%
26%
28%
30%
32%
34%
36%
Table 2. Health System members as a percentage of total number of workers by regime
2007 2008 2009 2010 2011 2012 2013 2014
(May) HEALTH 84.38% 87.18% 88.50% 88.94% 89.64% 89.90% 91.52% 91.65%
CONTRIBUTORY
R. 45.73% 46.03% 44.02% 44.24% 45.05% 45.24% 46.93% 49.70%
SPECIAL R. 2.17% 2.04% 2.18% 2.53% 2.28% 2.53% 2.69% 2.59%
Contributor 37.51% 37.83% 35.50% 36.03% 35.80% 36.86% 38.30% 41.45%
Beneficiary 10.39% 10.20% 10.66% 10.67% 11.32% 10.76% 11.04% 10.52%
Other 0.01% 0.04% 0.04% 0.07% 0.21% 0.16% 0.27% 0.31%
SUBSIDIZED R. 36.45% 39.10% 42.28% 42.15% 42.28% 42.10% 41.83% 39.30%
UNKNOWN 0.04% 0.01% 0.01% 0.02% 0.03% 0.02% 0.07% 0.06%
Source: DANE “Empleo informal y seguridad social”4
It is important to remark that the number of people making their proper contributions to the health system have been increasing while the quantity of people in the subsidized regime is also increasing.
Figure 2. Percentage change of employed population according their type of membership in GHS, 2014
Source: DANE “Empleo informal y seguridad social”
“General system of Occupational Risks Insurance” (GORI)
It is mandatory for all employers to enroll their workers in the GORI system. The amount of the contributions depends on the potential risk that derives from the performance of the employee in a particular job. The GORI provides disability pensions and compensation in the occurrence of workplace accidents and occupational illnesses.
4 Idem.
7.0%
-5.8%
6.3%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Contributors Beneficiaries Subsidized R.
Nevertheless, there is a fourth subsystem, which could be called “Complementary Social Services”. It includes for example financial support for indigent elders and an unemployment subsidy.
In summary, social security in Colombia provides the following benefits:
Medical assistance: Even when health is considered as a fundamental right in Colombia, it is necessary to make a minimum number of contributions to access health services.
Benefits for common disease: Sick workers have the right to receive compensation for the time during which they were not able to work.
Benefits for maternity and paternity: It has the same logic of the benefits for common disease, that is to say that the GHS has to cover salaries of parents around the time of the birth of their child, for both men and women. Women are entitled to a period of maternity leave of 14 weeks; the period is 8 days for paternity leave.
Benefits for work-related accidents and occupational diseases: The insurance covers the payment of compensation for disease or death when the accident or sickness is work- related. It covers medical expenses, disability pensions when the employee is not able to work anymore and survivor’s pensions when the employee dies.
Retirement benefits: This is the old-age pension. By 2014, to be entitled to receive an old- age pension, the employee must have contributed for 1,275 weeks (by 2015 it will be 1,300 weeks) and must be 57 years old for women and 62 years old for men.
In Colombia, there are three main problems in Social Security: i) low coverage, ii) lack of equity and iii) fiscal unsustainability; nonetheless, that does not mean that the quality of services provided by the system is not a problem.
Coverage: The improvements in coverage have been minimal. 20 years ago when the system was reformed, the traditional system coverage reached 16% of older adults. By 2012, only one in five older adults was a member of the traditional system. Between both systems, meaning the traditional system and the one created in 1993 (Individual Saving System), the number of beneficiaries of Social Security older than 65 years is close to 44%, which according to the World Bank is one of the lowest coverage rates in the region5. As shown before, only 35% of the working population is making the respective contributions for receiving an old-age pension.
Equity: In terms of equity, some studies suggest that workers at the bottom end of the earnings scale cannot meet the requirements to receive an old-age pension, because their contributions are not sufficient. Therefore, those people are financing the old age pensions of workers with a higher income. Also, there is evidence that the majority of subsidies in
5 Portafolio (2014). El sistema de seguridad social tradicional de Colombia se encuentra entre los más débiles de América Latina en cuanto a su cobertura. Available at http://www.portafolio.co/economia/colombia-es-los-mas-debiles-seguridad- social-bm
pensions are given to the richest quintile of the population, which is a problem of equity but also a consequence of low coverage rates6.
Fiscal sustainability: According to studies, 42% to 72% of the amount of pensions within the Average Premium with Defined Benefit System are subsidized7. On the other hand, the General Pensions System has not evolved in parallel with demofigureic changes. For example, the life expectancy is higher today; therefore, there is an increasing necessity for old age pensions.