Colombia Update: Payment of pension contributions for the periods of April and May 2020

By means of Decree 558 of 2020, the Colombian Labor Ministry adopted certain measures to temporarily decrease the contribution to make the payment of contributions to the General Pension System for the periods of April and May, 2020, from which employers and independent employee were exonerated by means of Decree 558 of 2020.

The main measures are summarized below:

(i) Employers and independent employees who have made use of the exemption of contributions established in Decree 558 of 2020, will have 36 months counted as of June 1, 2021 to make the contribution.

(ii) 75% must be paid by the employer and the remaining 25% must be paid by the employee. Independent employees must make the complete contribution from which he was exempt.

(iii) Employers are legally entitled to withhold from employee’s salary and/or final liquidation the value corresponding to 25% of the pension contribution.

(iv) In the cases in which the employee was retired from the company, the pension funds must accredit in the affiliate’s work history, the weeks corresponding to 75% of the contribution made. Notwithstanding the foregoing, the employee may pay the missing percentage.

(v)  The salary base (IBC) must correspond to the one reported to make contributions to the General Social Security System in the periods of April and May 2020.

(vi) The payment of the missing contributions that has not been made before June 1, 2024 will generate moratorium interest as of said date.

(vii)  Before June 1, 2021, the Ministry of Health will carry out the corresponding temporary modifications in the PILA system.

(viii) The term for employers to make the missing payment of those employees who are less than 3 years of reaching the pension age, should not exceed said date, in order not to affect the rights of the employees.