17 of April 2020
COVID 19 | Temporary Reduction of the Mandatory Pension Contribution | April 17
Decree 558 of 2020
The Ministry of Labor issued Decree 558 of 2020, enforcing measures to temporarily reduce the amount of the mandatory contributions to the General Pensions System (“GPS”) and to protect the pensioners on the programmed retirement mode.
- Public and private employers can decide to pay 3% instead of a 16% pension contribution to the GPS during the months of May and June of 2020.
- In the case of dependent employees, the employer will pay 75% of the contribution and the employee a 25%.
- This alternative applies also for independent employees; however, they must pay the complete 3%.
- The reduction in the pension contribution will not affect the right to employees to access in the future to an old age pension or a disability pension or a survivor’s pension.
- Additionally, the Decree established a mechanism for private pension funds to transfer pensioners under the programmed retirement mode to the public pension system when the funds in their pension saving accounts does not cover a monthly pension amount equivalent to 1 minimum wage.
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