The 14th FIAP - Asofondos International Forum, considered one of the most important academic events of the funds industry in Latin America, was held virtually on 1, 2 and 3 June 2021, sponsored by several renowned companies, including Santander CACEIS. This edition aimed to cover topics related to long-term savings, pensions, capital markets and the financial sector in general under the current economic situation.
Asofondos is a non-profit organisation that represents all the activities of the Pension and Severance Fund Administrators in Colombia. It is currently considered the most representative pension organisation in Colombia. It has mandatory pension funds with a value of 317 trillion COP, around 1/3 of Colombia's 2019 GDP, and 17 million members, severance funds with a value of 19 trillion COP and 9 million members, and voluntary pension funds with a value of 24 trillion COP and 793,000 members.
The congress featured 22 guest speakers, academics and professionals. The main focus was on the major challenges that economies are currently facing due to the macroeconomic situation caused by the Covid-19 pandemic. Among these challenges, emphasis was placed on the fiscal difficulties that emerging countries and their pension systems will face due to the fact that there are not enough resources to face the difficulties derived from the pandemic.
Santiago Montenegro, President of Asofondos, demonstrated the paradigm shift that the pension system in Colombia has undergone and the challenges facing the sector. As an example, he explained that half a century ago in Colombia, for every pensioner, 11 people contributed to the pension system; today only 5 people contribute to the system. He also compared the current situation between Colombia and Spain, given that these countries have the same total and working-age population. The results he presented showed that in Spain there are 19 million people contributing to the system, while in Colombia only 8 million contribute to the system.
There are currently two main pension schemes in Colombia: the public pay-as-you-go pension system, administered by Colpensiones, and a funded pensions system in which there are several private administrators. One of the main characteristics of the country's pension system is that it has low coverage: less than a quarter of the country's older adults are able to obtain a pension. The country's loyalty rate, (this is, those who consistently contribute), is less than 40%. At the same time, only 60% of those who contribute consistently are eligible for a pension. The annual contributions made by the government to support the payment of the monthly allowances of Colpensiones and the special schemes are equivalent to 3.2% of GDP; 2/3 of these contributions go to special schemes, such as the security forces, and the rest to the main public scheme, Colpensiones.
Santander CACEIS Colombia is an agile, dynamic and adaptable alternative to offer services to local institutional investors, both in local custody and abroad, for all types of assets, such as fixed income, equities, ETFs, international investment funds and private equity funds. Thanks to the capabilities deployed in Colombia by Santander CACEIS, the AFPs (Pension Funds Administrators - Administradoras de fondos de pensiones in Spanish) can concentrate on their core business and access, through a single interlocutor, our own and sub-custody network worldwide.