Colombia has removed a 30% ceiling on foreign investments by mandatory private pension funds, restoring managers’ ability to allocate workers’ savings abroad without that overall limit. The Ministry of Finance and Public Credit issued Decree 1490, dated Tuesday, 6 October. It took effect Wednesday, 7 October, according to El Tiempo.
The move reverses a rule adopted under leftist former President Gustavo Petro. His government wanted more pension savings invested in Colombia. Conservative President Abelardo De La Espriella, in office since August, published a draft repeal on 10 September.
Who Decided the Allocation Rules
The ministry’s financial regulation unit board approved the repeal at an extraordinary session on Thursday, 1 October. Decree 1490 repealed three articles that Decree 369 added in April to Decree 2555 of 2010, the financial sector’s main rulebook. Those articles set a global 30% ceiling on foreign assets across the four mandatory fund types.
The former cap would have required funds to cut foreign exposure to 35% within three years and 30% within five, mainly by directing new contributions into Colombian assets. Fund managers also had to submit adjustment plans to the Superintendencia Financiera, the financial regulator, by 7 October. The regulator told the ministry that no plans had been filed as of 7 September.
The repeal removes that specific overall ceiling. It sets no new target for foreign holdings and doesn’t order funds to move money abroad. How quickly managers might increase foreign investments, if at all, remains unknown. Older fund-by-fund limits remain in force, and the decree doesn’t restate them.
Workers’ Savings and the Investment Figures
Finance Minister Miguel Gómez Martínez said the change protects Colombians’ savings. “Those resources do not belong to the fund managers; they belong to the workers,” he said, according to La República. The decree says the cap upset the balance between risk and return, increasing risk and lowering expected returns. In an illustrative model, the ministry’s technical memo estimated that the cap reduced long-run expected returns from 6.80% to 6.26%.
Mandatory pension funds held COP 557 trillion, about US$172 billion, on 31 July, according to ministry figures based on regulator data. Of that total, COP 248 trillion, about US$77 billion, or 44.5%, went into foreign investments. The foreign share stood at 48.4% at the end of March, before the cap took effect. The ministry attributed the decline to a stronger peso, not selling. U.S.-dollar holdings grew by US$5.7 billion between March and July, reaching US$72.5 billion; euro assets totaled COP 11.5 trillion, about US$3.5 billion.
At July values, the 30% ceiling would have required funds to shift about COP 81 trillion, or about US$25 billion, into Colombian assets. When the cap was drafted in January, Forbes Colombia estimated that more than COP 120 trillion, about US$37 billion, would return home. Conversions use the official TRM exchange rate of 3,238.88 pesos per U.S. dollar for Thursday, 8 October, certified daily by the Superintendencia Financiera.
Limits and the Reform Context
Asofondos, the fund managers’ trade group led by Andrés Velasco, welcomed the repeal as a boost to diversification. Velasco said a wider margin helps manage risk and find returns for Colombian workers, La República reported. The published documents included no portfolio figures after 31 July, so they don’t establish whether the repeal has already changed investment allocations.
Colombia’s 2024 pension reform, Law 2381, was mostly upheld by the Constitutional Court on 25 August and is set to take effect on 1 April 2027. The government estimates that workers in the reform’s transition regime hold about 45% of the private system’s money, reducing the base to which the cap would have applied. The ministry said specific prudential limits and managers’ own risk controls will continue to protect workers’ savings. The source reports no demographic change associated with the repeal.