| Severance
Original Version in Spanish: https://www.miplatamifuturo.com/como-retirar-las-cesantias/
February is a very important month for Colombian workers. Each 14th of this month they receive, from their employer, their severance pay. This benefit seeks to protect you in the event of losing your job, but it can also be used to meet short and long-term goals such as purchasing your house or paying for your studies.
Those who are entitled to the payment of this benefit are employees with a direct employment relationship with the employer. The amount of severance pay is equivalent to one month of salary for each calendar year worked or proportional if the period is less than 12 months.
As an independent worker, you can join voluntarily and save one-twelfth of your annual income as severance pay.
How can you use them?
To know how to take advantage of these savings, find here the uses permitted by law:
1. Contract termination
You can withdraw your severance pay if your employment relationship with the company you worked for ended. In this case, you can request the total available balance.
2. Withdrawal for home purchase or rental repair:
You can withdraw your severance pay for the following modalities:
Payment of mortgage loans
Payment of taxes such as property and valuation taxes
Use them as a guarantee to access the housing subsidy in your compensation fund, requesting the immobilization of your Severance Payments
Use them as support for the acquisition of credits with cooperatives and employee funds, through the Severance Pledge figure: Cooperatives up to 50% of the available balance of your Severance Payments. Employee Fund up to 100% of the available balance. Compensation Funds up to 100% of the available balance.
Remodel or make repairs to your own home
3. Education
You can withdraw your severance pay to pay for your undergraduate and graduate studies and continue expanding your knowledge for your professional development and growth, or also to use them to pay in advance for the higher education of your children or dependents:
Tuition payment for higher education, postgraduate and continuing education
For the payment of tuition fees for “development and management of human talent” studies offered in educational institutions such as SENA, INCAP, CESDE, and others accredited by the Ministry of Education of your city or by the Ministry of Education of Colombia
Credit payment with ICETEX
Diplomas and courses that have recognition by the Colombian State, in which it is reported that the diploma or language course complements the academic curriculum.
It does not apply to pay for seminars, conferences, degree fees, or registration fees.
4. Withdrawal due to decreased income due to COVID-19 emergency:
You can withdraw your severance pay if the amount of your salary decreases due to the Economic, Social, and Health Emergency that occurred in Colombia as a result of the global COVID-19 pandemic. You can request your severance pay for this reason only if you find yourself in any of the following situations:
You have a decrease in your monthly salary income since the Economic Emergency
Your contract was suspended as a result of the Economic Emergency.
Eye! This reason for withdrawal will be valid as long as the “State of Emergency” by the Colombian Government is in force, decree 488 of 2020. To make the withdrawal, you must have a certificate from your employer that shows that there was a decrease in income.
5. Military service:
You can also withdraw your severance pay if you are working and have been called to perform military service, in this case, you can request the total available balance.
6. Integral salary
If you change the type of salary you earn, that is, you go from having an ordinal salary (1) to an integral one (2).
(1) The ordinal is that salary in which the payment of all legal benefits is included.
(2) The integral is that salary in which the payment of Severance, bonuses, or extra payment benefits is not included because it is considered that these payments are already included in the salary you receive.
By changing your salary type to integral, you will be able to withdraw 100% of the balance you have accumulated on the date of the salary type change. Remember that an integral salary is one greater than the 10 Current Legal Minimum Wages.
7. Employer replacement
You can withdraw your severance pay if the company you work for had a change of owner or employer. In these cases, the former employer records the total value of the severance pay until the date on which the replacement occurred. In this case, you can request the total available balance.
8. Pledge
As a backup for a loan, you can pledge your severance payments:
Housing, carried out by a financial institution
For any concept granted by corporate entities, you will only be able to commit 50% of these savings
From credits granted by legally recognized employee funds and family compensation funds, it is possible to commit up to 100% of the value of severance pay
Home loans made by your company.
Garnishment: according to the law, up to 50% of your Severance Payments can be garnished by authorized cooperatives or to cover alimony payments required by law.
Do severance generate yields?
Remember that in the four Pension and Severance Fund Administrators (Colfondos, Porvenir Protección, and Skandia), your severance payments are invested so that your savings generate returns and grow over time. There are two portfolios to optimize these returns depending on the period in which you are going to leave the saved resources.
You can choose the long-term portfolio if you keep them for a long time as unemployment insurance or purchase a home since the profitability is projected over a long period of time (2 to 3 years). Or you can choose the short-term portfolio if you will use them soon (in less than a year).
What is the process for withdrawing my resources?
Currently, you can access them in a simple and easy way, even without leaving home, thanks to the fact that administrators have enabled online services that allow access to be 100% digital. To carry out the procedure, go to your administrator's website, read the documents that you must present according to the use you are going to give them, fill out the form through the app or the affiliate portal, and that's it!
So now you know severance opens up a world of opportunities if you know how to take advantage of them and use them intelligently. That is why the invitation is to save severance pay as much as you can and use it in times of work contingencies because they can be your lifesaver.
Opmerkingen