By Establishing Rules Intended To Finance The Pension Liabilities Of Local Authorities They Are Held, The National Pension Fund Territorial Entities Created And Other Provisions In Relation To Benefits

Original Language Title: Por la cual se dictan normas tendientes a financiar el pasivo pensional de las entidades territoriales, se crea el Fondo Nacional de Pensiones de las entidades territoriales y se dictan otras disposiciones en materia prestacional

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LAW 549
1999 (December 28)
Official Gazette No. 43836 of December 30, 1999
By establishing rules intended to finance the pension liabilities of local authorities are issued, the Fund is created national Pension local authorities and other provisions in relation to benefits. Summary

Term Notes


TERRITORIAL ENTITIES ARTICLE 1o. COVERAGE pension liabilities. In order to ensure the economic stability of the state, territorial units should be covered in the manner provided in this law, the value of pension charge, within the time and in the percentages indicated by the National Government liabilities. This obligation must be fulfilled from the entry into force of this law. In any case, pension liabilities should be covered in one hundred percent (100%) within a period not exceeding thirty (30) years.
To this effect, they shall be taken into account liabilities of the central sector of local authorities such as the decentralized sector and other entities of the territorial level.
To determine the coverage of liabilities, will be taken into account existing resources in the National Pension Fund territorial entities referred to in article 3 refers. of this law, such as those that exist in the Territorial Pension Funds, pension trusts and reserves of decentralized entities constituted in accordance with law and applicable regulations.
PARAGRAFO 1o. Understood by pension liability obligations made by pension bonds, the corresponding mathematical reserves and pension contributions value parts and pension bond.
PARAGRAFO 2o. For purposes of this law, reserves established by decentralized entities, must be supported at all times by liquidating assets.
Article 2.
. RESOURCES FOR PAYMENT OF PENSION LIABILITIES. They are used to cover pension liabilities the following resources:
1. The new resources to be transferred to departments and districts by way of revenue tax originated in the resources collected on account of tax on financial transactions that Article 117 of the Law of the Development Plan refers to, which will go to meet territorial pension liabilities of the areas of health and education, and shared between these areas and between departments and districts, in the same proportion as distributed among the sectors and entities referred located in the respective tax year. Effective Notes

Effective Jurisprudence

2. Those caused by reason of the percentage increase in the participation of municipalities in the current revenues of the Nation, which is made from 2000, including the latter, in accordance with paragraph of Article 357 of the Constitution, which It shall be distributed among the accounts of local authorities in the same way the shares are distributed in national income. Editor's Notes

Effective Jurisprudence

3. For 2000 and following a percentage not exceed seven percent (7%) of the resources of the National Endowment Fund, and will not compromise the resources earmarked for local authorities. These resources will be distributed among the accounts of local authorities with the same criteria used for the distribution of investment resources from the National Royalties Fund. Editor's Notes

Effective Jurisprudence

4. Ten percent (10%) of resources from national privatization under the terms of Article 23 of Law 226 of 1995, which will be distributed equally between the municipality, department and district, if the case may be, in the which the main activity of the company whose shares are disposed of is located.
5. Effective Notes

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6. As of 1. January 2000, twenty percent (20%) of assets whose domain is extinguished in favor of the Nation, under the application of Law 333 of 1997 and the rules that complement or add. These assets continue to be administered by the authorities under the existing provisions, with the participation of the Ministry of Finance and Public Credit, and must be sold to your product and administration Fund value increases. Editor's Notes

7. As of 1. January 2000, 15% of product revenue from the sale to the private sector shares or assets of local authorities. Editor's Notes

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8. As of 1. January 2001, 20% of product registration tax. Effective Notes

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9. Since 2001, 5% of current income free destination of the respective department. This percentage will increase annually by one percentage point, so that from the year 2006, inclusive, is intended to fund 10% of current income free destination of the respective territorial entity. Effective Notes

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10. The income obtained from the exploitation of the Single National Loto, which organized the national government within six months after the entry into force of this law. These resources will be used to meet the pension liabilities of the health sector in local authorities. Initially resources are intended to cover the funding responsibility of this liability under law 60 of 1993, for which the allocation of resources will be distributed between the national government and local authorities in the same proportion to be financed these pension liabilities , under Article 33 of Law 60 of 1993 and the provisions that add to or reform. Once covered shared responsibility for funding in accordance with the Act, the Lotus product will finance the rest of the health sector pension liabilities of local authorities.
11. As of 2001, 70% of the product of national stamp tax. Effective Jurisprudence

PARAGRAFO 1o. The resources referred to in paragraphs 5, 6, 10 and 11, when they finance liabilities of local authorities, be distributed among the departments and districts in one hand and the municipalities of another, in the same proportion as resources the prosecutor and located corresponding to the participation of municipalities in the current national income each year. The distribution between each of the departments and districts and between each of the municipalities will be done according to the same criteria set out in paragraphs 1 and 2 of this Article, as applicable. For purposes of the corresponding distribution among municipalities districts calculations provided for in the Constitution shall not be taken into account.
Resources from a particular territorial entity will be allocated to such territorial entity.
PARAGRAFO 2o. As of 1. January 2001, the contribution of registration tax may increase by half a percentage point compared to the rates provided for in the law.
PARAGRAFO 3o. In any case to local authorities to national resources are added, other than constitutional transfers, it is necessary that they are fully complying with the rules governing the pension system and the obligations under this law.
PARAGRAFO 4o. The local authorities may allocate resources not related to the National Pension Fund for the Local Authorities Pension Fund territorial level or autonomous equities that have made for pensions.
PARAGRAFO 5O. Teachers in charge of municipalities, departments and districts must be affiliated to the National Social Benefit Fund of the Magisterium, under the terms provided in Laws 91 1989 60 1993 115 1994
PARAGRAFO 6o. For 2000 the National Government shall advance to local authorities (departments, districts and municipalities) that have outstanding you mesadas arrears at 30 October 1999, the corresponding value to cover such pension debt, deducting the value of the advance of the same year or in subsequent years, resources need to turn the nation to Fonpet in corresponding to the respective account of local authorities, taking into account the allocation of these resources part. The total amount anticipated by the Nation shall not exceed eighty billion pesos. Such advances will be used exclusively to pay overdue pension payments. The Government shall regulate the manner and timing in which the delay in pension payments on the aforementioned date, the formula for calculation of the value and distribution of resources will be credited when they reach not cover all overdue allowances.

PARAGRAFO the 7th. Developing the provisions of the Budget Law 2000, in connection with the investment that will make the department of La Guajira, in accordance with Law 226 of 1995, please clarify the following:
10% of the product sale of the interest of the nation and its decentralized entities in the Cerrejon Zona Norte, will be distributed as follows:
up to 50% towards the National Pension Fund territorial entities created by this law, to concurrency amount of the actuarial calculation of pensions and the remainder for the implementation of regional development projects in the department and municipalities where the main industrial activities to be developed privatization.
PARAGRAFO the 8th. The Ministry of Finance and Public Credit will design and adopt a financial management model that will determine the amount of resources that each local authority must transfer annually to Fonpet. This model will take into account the level of accumulated reserves, the size of the pension obligation and the expected behavior of payments. Within the entry into force of this law two years, the Ministry of Finance and Public Credit shall design and adopt the model set out in this paragraph. From the date on which this model is adopted local authorities may determine the amount of their contributions thereunder, which may be lower than those provided in this article as long as they meet the goals outlined in the model. While the model has not taken financial management, it must be complied in full with the contributions provided in this article.
Whenever contributions are reduced territorial entity under the provisions of this paragraph, in the same proportion the participation of the entity in the nation income transfers in developing this law will be reduced. Editor's Notes

ARTICLE 3o. NATIONAL PENSION FUND TERRITORIAL ENTITIES, FONPET. For purposes of managing the resources allocated to guarantee the payment of pension liabilities under the terms of this law, believe the National Pension Fund of Local Authorities, Fonpet, as a fund without legal personality managed by the Ministry of Finance and public credit, which aims to raise and allocate resources to the accounts of local authorities and manage resources through autonomous equities that are exclusively for managers of pension funds and private or public layoffs in trust companies private or public or private insurance companies or public life who are empowered to manage the resources of the General System of Pensions and pension regimes System excepted by law.
In any case the responsibility for the territorial pension liabilities correspond to the respective territorial entity. Therefore, the fact of the creation of the National Pension Fund Territorial Entities, destination of national resources to contribute to the financing of such liabilities or that by law the nation must make contributions to help pay liabilities pensionales of territorial entities level, does not imply that this assumes responsibility for them. Effective Jurisprudence

In the Fund each territorial entities possess an account for the payment of their pension liabilities. The values ​​recorded in the accounts belong to the local authorities and will be complementary to allocate resources to creating territorial Pension Fund and Heritage Autonomous Territorial designed to ensure pension liabilities in accordance with existing standards bodies.
. PENSION LIABILITIES as a priority project. Within the Development Plan of the respective entity it should be included as a priority project the creation of the necessary reserves and its administration through Fonpet to cover pension liabilities, in terms of law. Effective Jurisprudence

The 5th ARTICLE. TRANSFER OF FIXED ASSETS. The Government may set the broad parameters under which the Board of the Fund may authorize the local authorities delivered an amount of not more than thirty percent (30%) of the balance of the account of the entity liquid resources, destination to pay the pension obligations, from the sources of resources provided for in paragraphs 1, 2, 3, 8, 9, 10 and 11 of Article 2. of this law. In exchange for these resources, they must be delivered by the fixed assets territorial entities that can be managed in fiduciary assignments. These assets will be sold, to the extent that is required, and the resources to be transferred there Fonpet obtained.
The assets to be delivered shall be alienable, you can not receive in excess of their book value amount and, in any case, the territorial entity shall be bound to guarantee the liquidity of the same in the event that this is necessary. It will also periodically be determined the market value of such assets in the event that it is less than that for which the good is received, the local authority will be obliged to make up the difference to the extent that this is necessary for resources in your account to cover the value of pension liabilities according to actuarial calculation.

. RETIREMENT FUND RESOURCES NATIONAL PENSION TERRITORIAL ENTITIES. Without prejudice to the provisions of the preceding article, may not withdraw resources from the account of each territorial entity in the National Pension Fund of Local Authorities until added accumulated in the territorial account in the National Fund liabilities of the amount territorial entities with the resources they have in their territorial Pension Funds or its pension trusts or reserves legally constituted by decentralized entities or other entities of the territorial level, has covered one hundred percent (100%) of pension liabilities, in accordance with the respective actuarial calculation.
Fulfilled that amount, the entity may use the resources of the Fund to pay pension liabilities, provided that in any case the account balance in the Fonpet in the Territorial Pension Funds, in the autonomous equities whose made or reserves established by decentralized entities or other entities within the territorial level, cover the calculation of total pension liabilities of the entity.
As the sum of these balances, do not cover the calculation, the entity shall cover its pension liabilities due with the resources of Territorial Pension Fund, the Autonomous Equity made, the reserves established for that purpose, or other resources.
The Territorial Pension Fund and the autonomous equities created to guarantee pension liabilities according to Law 100 of 1993 and supplementary provisions, may be administered together in a single autonomous patrimony and its administration will be in charge of trusts, fund managers pension.
Likewise, when the pension liabilities of an entity are covered, resources which Article 2 refers. of this law that are caused from that date they may be allocated by the holder thereof for purposes that correspond according to the laws governing the allocation of these resources each entity. In any case, if the person ceases to be adequately covered resources must be used again to finance the company's account in the National Pension Fund of the Territorial Public Entities. National law that refers to, resources will be distributed among the accounts of entities that do not have covered all its liabilities.
Financial income on Fonpet resources be distributed among the accounts of local authorities contributors, in proportion to the value thereof and therefore be subject to the provisions of this law.

Article 7. RULES FOR THE OPERATION OF NATIONAL PENSION FUND TERRITORIAL ENTITIES. For operation of the National Pension Fund Territorial Entities The following rules shall apply:
1. The Fund resources recorded in separate accounts corresponding to each territorial entity.
2. Resources that correspond to each entity shall be registered in the respective account.
3. Within the account assigned to each territorial entity, the Fund will allocate sub-accounts corresponding to different sectors that generate pension liabilities that have specific sources of funding.

4. The resources will be managed through autonomous equities that constitute the National Pension Fund of the regional public bodies in the management companies of pension funds and severance pay in trust companies or insurance companies life that are selected through a process public bidding, which will be brought forward as provided by Law 80 of 1993. for purposes of this tender accounts of local authorities in the Fund may be divided in the manner determined by the Government in order that they can count with various administrative entities. In any case, banks must meet capital adequacy ratios determined by the National Government.
5. The minimum profitability of pension trusts to be established for the administration of the resources of the National Pension Fund Territorial be equivalent to the weighted average of the returns generated by all participants autonomous assets, reduced by ten percent (10%) accordance with the regulations issued by the National Government. These resources will be invested pension trusts taking into account the rules provided for investment of reserves regime of individual saving with solidarity, in accordance with the regulations issued by the National Government, in order to preserve its profitability and security. In any case the Fund may be used for purposes other than to finance the pension liabilities of local authorities under the terms and conditions provided in this law.
6. For purposes of determining the management fee it will take into account the profitability of the portfolio managed and paid from the resources transferred from the General Budget of the Nation.
7. Thirty percent (30%) of managed assets will be invested in mortgage bonds or which are designed to finance housing, issued by credit institutions duly authorized housing finance, in order that these establishments believe lines special credit to finance house purchase, according to the regulations to this effect issued by the Government.
. FUND EXECUTIVE COMMITTEE. The Fund will have a Steering Committee composed as follows:
The Minister of Finance and Public Credit, who will preside, or his delegate, the Minister of Labour and Social Security or his representative, the Director of the National Planning Department or his deputy, the Minister of Interior or his representative, two representatives of the departments, two representatives of municipalities, a representative of the district and a representative of pensioners appointed by the presidents of organizations of pensioners of local authorities, which are in legal force.
The Steering Committee of the Fund shall have the following features:
1. Determine the general policies of administration of the Fund in accordance with the law.
2. Approve the financial statements of the Fund.
3. Approve the replacement of assets by local authorities in accordance with article 5. of this law.
4. Its own regulations.

Article 9. Actuaries. For the implementation of this law, an actuarial calculation for each territorial entity and its decentralized bodies in accordance with the methodology and within the program to design the Nation-Ministry of Finance and Public Credit, from its resources should be developed. This program should include lifting work histories and calculation of liabilities and may involve departments in coordinating their municipalities.
The General Accounting Office will verify the existence of the necessary resources and reserves to account for pension liabilities in the manner provided in this law.

ARTICLE 10. OBLIGATION TO MAKE THE PROCESS TO ENSURE PAYMENT OF PENSION LIABILITIES. Is very serious offense not advance all the necessary procedures to cover pension liabilities in the manner provided in this law.
Corresponds to the territorial entity performing the transfer of resources to the National Pension Fund Territorial Entities whenever these resources are generated by the same territorial entity. When these resources are to be drawn by the Ministry of Finance and Public Credit, and turn it deducted directly and immediately to Fonpet resources.

Similarly, the Ministry of Finance and Public Credit may act as judge coercive jurisdiction for the transfer of the resources of the local authority, its decentralized agencies and other entities of the territorial level. For this purpose the corresponding resources may be seized by the Ministry. The provisions of this subsection is without prejudice to the provisions of the Organic Budget Law.

ARTICLE 11. PARTICIPATION OF TRANSFERS FOR MUNICIPAL SOCIAL SECTORS. They adiciónese a new paragraph to Article 21 of Law 60 of 1993, which will be the numeral 16. Accordingly paragraphs 16 and 17 of Article 21 of Law 60 of 1993 shall read as follows:
16. Covering pension liabilities of the respective entity through the National Pension Fund Territorial Entities.
17. In other sectors the social Conpes deems appropriate and at the request of the Colombian Federation of Municipalities. Effective Jurisprudence

ARTICLE 12. AMENDMENT OF ARTICLE 22 OF LAW 60 OF 1993 hereby added the following paragraph to Article 22 of Law 60 of 1993:
7. In covering the pension liabilities of the respective entity through the National Pension Fund Fonpet Territorial Public Entities, for which the percentage increase provided for by the Constitution from 2000. Effective
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ARTICLE 15. RESTRICTION ON FINANCIAL SUPPORT OF THE NATION. Prohibits the nation to grant direct or indirect financial support to local authorities and other public entities territorial level not comply with the provisions of this law, therefore them not be granted credits with national resources will co-finance projects , warrant or guarantee public credit transactions or transfer any kind of resources, other than those specified in the Constitution. Effective Jurisprudence

ARTICLE 16. INFORMATION AND DISCIPLINARY LIABILITY. In order to ensure monitoring of compliance with pension obligations regarding territorial entities, they must submit with the frequency indicated by the National Government to the Ministry of Finance and Public Credit, the information required for the purpose.
It is very serious offense the violation of the provisions of this law.

pension bonds. The pension bonds issued by local authorities and other public bodies to the Institute of Social Insurance, will be settled by calculating the present value at the date of transfer, the capital needed to finance a pension, with the age limits, percentage amount and time, the regime that is applied, reduced by the present value at the date of transfer, of contributions expected make the affiliate manager from the date of transfer and the date on which acquires the right date and capitalized. For all calculations the real effective annual technical interest rate of four percent (4%) will be used; actuarial factors will be calculated with the same technical parameters Individual Savings System calculated at four percent (4%) Actual annual cash. Bonds and certain accrued interest equivalent to the pension calculated as CPI DTF plus four (4) real points, between the date of transfer and payment date. Effective Jurisprudence

The wage base date (June 30, 1992 or the date immediately preceding if that date was not active) to calculate pension bonds shall be determined by the same wage factors are used for recognizing pension in the Regime pension Law 100 of 1993. the wage so determined will be updated to the date of transfer, with the consumer price index certified by the DANE. The same factors will be used for recognizing pension.

In any case the issuer and each taxpayer liable each for their share of the bonus, for which the bonds may be issued through coupons. In the case of Individual Savings Regime may provide for the division of the bond in the manner determined by the Government. The National Government shall determine the general rules under which in exceptional circumstances, the Administrator may authorize the payment of bonds or shares parts thereof in installments, through early annuities, within a period not exceeding five (5) years, and before granting sufficient guarantees. The legal representative of the entity defaulting on payment of its obligation incurred grounds for misconduct. To finance herein provided, certified by the Banking Superintendency return to the Pension Fund to the respective bond holder is insured will be used.
Without prejudice to the requirements for access to the pension in the transitional regime, all laborados times or listed in the public sector and quoted on the ISS will be used to finance the pension. Where time is not included for the recognition of pension and therefore not included in the calculation of the pension bond or not appropriate to issue bonus will be given to who recognize the pension, by the entity that received contributions or one in which no contributions served the equivalent of the old-age pension contributions that made or will have been made to the Disability, Old age and Death of ISS, updated in pension DTF value. In these cases, when times laborados with the public sector, are pre-1967, the value is calculated with the contribution rate for old-age pension governing for the year 1967, discounting that amount from the value of the bond that may apply. In the case of pensions regime transition from public sector recognized by the ISS will be deducted from the bond value the contributions made to the ISS before the date of transfer, updated in the manner herein provided. Effective Notes

When necessary to reassess already issued bonds that are not firm, because of the change in the calculation method of bonds or error in the issuance, the issuer shall reassess the bonus, negating the initial bonus and issuing a new one, for which only the communication to the beneficiary will be required. Effective Jurisprudence

The pension fund managers and insurance companies will have access to the trading systems of the stock exchanges to perform operations on pension bonds. To this end, the Securities may regulate the trading of such securities.

ARTICLE 18. INSPECTION, MONITORING AND CONTROL. Inspection, monitoring and control over the administrative entities of Fonpet resources shall be exercised by the Banking Superintendency, which shall ensure the proper management of the resources managed. This entity will be obliged to regularly inform the public and minimal view of two (2) times a year, through mass media, on the management of resources Fonpet and periodically require managers of pension funds and severance pay, trust companies and life insurance companies, which manage the autonomous patrimony of each organ, reliable information on financial indicators, management and outcome revealing demonstrate proper management and sound administration.

ARTICLE 19. BUDGET OF INCOME AND CAPITAL RESOURCES. Perform the following addition in the General National Budget for fiscal year 2000, in the sum of eighty billion pesos legal currency ($ 80 billion), as follows:
General Revenue Budget nation
1. National Budget revenues $
2. Capital resources of the Nation $

ARTICLE 20. EXPENDITURE BUDGET APPROPRIATIONS ACT OR. Perform the following addition in the General National Budget for fiscal year 2000, in the sum of eighty billion pesos ($ 80 billion), legal currency, as follows: Section 1301

Ministry of Finance and Public Credit

National Contribution Total Total $ 80,000,000,000 $ 80,000,000,000
A. $ Operation $ 80 billion
Total $ 80 billion $ 80 billion addition

The Accidental Conciliation Commission submits this report with the text of articles reconciled and the final text of the Draft Law No. 62 of 1999 Senate Chamber 181 1999, by which dictate rules designed to fund the liability pensional of local authorities, the National Pension Fund territorial entities created and other provisions in relation to benefits, in order to be approved by the plenary of the respective Houses.

Article 21. This is effective as of its enactment and repeal other provisions that are contrary.
The President of the honorable Senate,
The Secretary General of the honorable Senate of the Republic, Manuel Enríquez Rosero
The President of the honorable House of Representatives,
The Secretary General of the honorable House of Representatives,
Given in Santa Fe de Bogota, DC, 28 December 1999. PASTRANA ARANGO

ANDRES Technical Deputy Minister of Finance, in charge of functions
Office of the Minister of Finance and Public Credit ,