Through Decree 1174 of 2020, the Government regulated the access and operation of the Social Protection Floor (“PPS”[1]) included in Article 193 of Law 1955 of 2019 (National Development Plan 2018-2022). The main developments are included below.
Social Protection Floor
The Social Protection Floor (PPS for its acronym in Spanish) is made up of (i) the Subsidized Health Regime; (ii) an Inclusive Insurance which covers the risks derived from the worker’s activity; and (iii) the Periodic Economic Benefits (BEPS[2]). The latter constitutes a complementary mechanism for the protection of the elderly.
Application scope
The following people shall be obligatorily included in the PPS:
- Employees or contractors who receive a total monthly payment of less than 1 monthly minimum statutory salary; and
- Persons who have various employment agreements and/or independent services contracts, whose total monthly income does not exceed 1 monthly minimum statutory salary.
People who meet the following conditions will be voluntarily affiliated to the PPS:
- Not having an employment agreement.
- Not having an independent services agreement.
- Not being able to pay the amount of the Social Security System contribution.
- Having a total monthly income of less than 1 monthly minimum statutory salary.
* The PPS does not apply to those who have a monthly income of more than one (1) monthly minimum statutory salary.
Stages
The PPS will be developed according to the following stages:
- Registration of the employer/contracting party before the BEPS Administrator.
- Affiliation of the employee/contractor to the PPS.
- Payment of PPS contributions.
Registration of employers and contracting parties
Employers and contracting parties who hire people with a monthly income of less than 1 monthly minimum statutory salary, must be registered before the BEPS Administrator. This registration must be made at the time of making the first PPS contribution.
Contributions
The contributions will be classified according to the type of person affiliated to the PPS, as explained below:
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Contributions of people compulsorily included in the PPS |
Contributions of people voluntarily affiliated to the PPS |
*It must be an additional amount to the one agreed for the activity/service to be carried out. It cannot be attributed to the employee/contractor. |
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* People will be able to make additional, voluntary contributions, which will be deposited directly into the BEPS individual savings account.
Contribution limit
The value of the maximum annual PPS contribution may not exceed the value set for the BEPS, which for the year 2020 is COP $1,260,000. In case of exceeding it, the contribution will be counted for the following year.
Oversight
The Pension and Payroll Tax Management Unit (UGPP) will be in charge of supervising the contributions.
Obligations fulfillment
An employee/contractor’s affiliation to PPS does not exonerate:
- The employer from the payment of social benefits and other obligations arising from the employment agreement.
- The contracting party from the compliance of the rest of duties related to the contract’s nature.
Affiliation to the Social Security System
On a voluntary basis, the employee or contractor (earning less than 1 monthly minimum statutory salary) may be affiliated to the Social Security System. To do so, the contribution must be made on a base income equivalent to 1 monthly minimum statutory salary.
Enforcement date
The PPS will be in force from February 1, 2021.
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[1] PPS stands for “Piso de Protección Social”.
[2] BEPS stands for “Beneficios Económicos Periódicos”.