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Scotiabank On Colombia Pension Reform Draft

COLOMBIA
  • Scotiabank say the Government is probably repeating its strategy of initiating the discussion with significant demands and, after that, splitting the difference during the political negotiation.
  • In their opinion, the current proposal could increase the noise in markets at the beginning. In any case, they think that the point about contributions to the public system is a key point to negotiate; alternative proposals from recognized think tanks are talking about contributions to the public fund up to one minimum wage (which impacts 40% of current affiliates of private pension funds). However, we have to wait and see the official position of traditional parties in Congress.
  • Scotiabank note that the draft could change if the Government includes comments from the other actors in the ongoing round tables. We will know the official proposal on Thursday, March 16.
  • For now, the draft is not discussing parameters (i.e., contributions rates, replacement rates, age of retirement). They think that this discussion will pick up during the Congress debates.

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