What is it?
Decree 558 of 2020 temporarily modified the contribution to the General Pension System during the COVID-19 pandemic. The contribution was reduced to 3% of the Base Contribution Income (BCI), with the employer assuming 2.25% and the worker 0.75%. This measure aimed to provide liquidity to employers and workers affected by the crisis and to protect employment. It was in effect from April 15, 2020, and covered the months of April and May, with corresponding payments due in May and June.
Is it currently in force?
Decree 558 of 2020 was declared unconstitutional, losing its validity. Additionally, it was ordered to reverse the transfers made to Colpensiones. Through Decree 376 of 2021, a 36-month period was established starting June 1, 2021, for employers in the public and private sectors, as well as independent workers who availed themselves of Decree 558 of 2020, to complete the missing contribution payments. No default interest accrues during this period. The deadline to make pending payments is June 1, 2024.
How to make the contribution payment?
The employer must make the payment using type I form, making the payment for each month in separate forms. It is important to note that partial payments are not allowed.
What is the amount to be paid?
The contribution is divided as follows: the employer assumes 75% and the worker the remaining 25%. Both the employer and the worker may choose to pay the entire outstanding contribution and then agree on reimbursement between them. In the case of independent workers, they must pay 100% of the outstanding contribution to the General Pension System. Additionally, employers have the authority to deduct the 25% corresponding to the pension contribution from the workers' salary and/or settlement. No authorization from the worker is required to make this deduction, but the employer is obliged to inform the worker about it.
What is the BCI?
The Base Contribution Income corresponds to the periods of April and May 2020 and cannot be less than the minimum wage.
Points to consider:
- If a worker resigns or is dismissed, the employing entity must withhold the 25% of the outstanding contribution from pending salaries.
- In case of resignation, dismissal, or liquidation of a company, if only the employer's contribution was paid, the Pension Administrators must record in the affiliate's labor history weeks equivalent to 175% of the contribution made.
- If a company cannot pay within the established period, the worker may make the full payment and then agree on the reimbursement method with the employer.
- After making the payment, the labor history must be updated by increasing the contributed weeks by 4.3.
- If the worker does not pay, but the employer does, the update will be proportional to the payment period made.
If the worker meets the requirements to retire, the employer is not obliged to pay the outstanding contribution.