Economic and Legal Foundations of the Social Welfare System, Specifically of Pensions in Colombia and Minimum Content of the Reform

Abstract

The general social security system in Colombia poses a challenge to the State in its role as a protector of fundamental rights. This is done in accordance with the constitution and under the guidelines of international law. Articles 93 and 94 of the 1991 constitution established the principles of social security as irrevocable, mandatory, and of public order. Law 100 of 1993 implemented the general social security system, which encompasses aspects such as health, pensions, and labor risks.

The social security model in Colombia; faces, challenges and transitions that require proper regulation to guarantee the rights of affiliates and pensioners. Two pension regimes have been established: The Prima Medium Regime (RPM) and Individual Savings Regime with Solidarity (RAIS). The RPM is a public fund that provides pensions based on defined benefits and mandatory contributions. The RAIS, on the other hand is based on individual savings accounts managed by private entities. Affiliates must accumulate sufficient capital to finance their own pension.

The social welfare model in Colombia is based on theoretical principles such as the liberal, social-democratic, and corporatist models. Social protection is sought through collaborations between the State, labor unions, and the family. The pension system in Colombia does not meet the requirements expressed in the theoretical foundations of Welfare States, hence the development of some minimum principles that a pension reform should contain.