One in three payroll pesos in many firms goes to mandatory social charges — a scale few expect.
We open this guide to clarify what is required today and what shifts are coming in the pension system in July 2025. Our goal is to give clear steps so companies can stay compliant and competitive.
We explain how the social security subsystems — healthcare, pension, labor risks, and family allowance — interact with payroll. That includes who pays, how much, and why it matters for workers and their families.
We also outline common market add-ons such as life insurance and dental plans, show typical cost loads (around 30%–50% of annual salary), and preview the new multi-pillar pension model and the 2.3 SMMLV threshold that changes contribution flows.
Key Takeaways
- Mandatory coverage spans state and private-equivalent schemes; universal access is the aim.
- Total statutory spend often equals 30%–50% of pay, varying by risk class.
- EPS manage the POS; private plans can speed access or expand services.
- Major pension reform in 2025 introduces new pillars and affects payroll handling.
- We provide a checklist to align HR, payroll, tax, and legal teams for compliance.
How Colombia’s social security system shapes employer obligations today
We explain how the legal security system frames contribution flows, reporting, and employer responsibilities. The social security system is structured around healthcare, pension, labor risks (ARL), and family allowance (CCF). Each node defines where a company pays and what it must report.
Contributory base income determines percentages due. Risk-class ratings set by law change outlays across job families and worksites. That means payroll charges can vary significantly by role and activity.
Employers must calculate, withhold, and remit both shares via PILA. They also report status changes — such as sickness, leave, maternity, or termination — so cash and in-kind health coverage and ARL payments flow without interruption.
Important: companies that declare income tax may qualify for exonerations for staff earning up to 10 SMMLV. When applicable, those offsets can reduce total social security contributions from ~30% to around 17% of the contributory base.
- Map contributions by subsystem to simplify remittance.
- Track risk classes to forecast payroll load.
- Maintain records and audit readiness for inspections.
What’s mandatory: employee benefits Colombia employers must fund and administer
This section breaks down the compulsory payroll items every firm must fund and administer. We state the rules, who pays what, and the timing for remittance so teams can act with clarity.
Social security subsystems and contribution rules
The social security system covers healthcare via EPS (POS), pensions, ARL for occupational risks, and family allowance through CCF.
Pension contributions are typically 12% from the employer and 4% from the employee; contractors may pay 16% total. Caps apply at 25 SMMLV and a solidarity surcharge of 1%–2% hits higher salaries.
Withholding, wage base and allowances
Employers must withhold both shares and remit via PILA, and report status changes promptly. Minimum wage rules set eligibility for the transport allowance (applies up to 2 SMMLV) and affect the wage base used to compute contributions.
PTO, prima, severance and workwear
Workers accrue 15 working days of vacation per 12 months and 18 public holidays. The 13th-month prima equals 30 days split in two payments (mid‑year and December). Además, los empleados también se benefician de un horario flexible que les permite equilibrar sus responsabilidades laborales y personales. Las políticas de horas de trabajo fomentan un ambiente de productividad y bienestar, adaptándose a las necesidades individuales. Esto contribuye a la satisfacción general de los trabajadores y a su compromiso con la organización.
Severance must be deposited to a fund and receives a statutory 12% annual interest. For lower-wage roles, shoes and workwear are required every four months after three months’ tenure.
- Key action: keep accurate job coding to control ARL premiums and audit trails.
Paid leave and protected time off: who pays, how much, and for how long
We summarize paid leave rules so teams can plan coverage and payroll without surprises.
Vacation scheduling, accrual, carryover, and cash-out limits
Workers accrue 15 working days per 12 months. We may schedule vacations with 15 days’ notice.
Staff can cash out up to half of accrued time. Carryover is limited to two periods, or up to four in specific roles or for foreign hires.
Public holidays and working on a holiday
There are 18 public holidays. If someone works a holiday, pay follows Sunday/weekly rest premium rates so payroll adds the correct premium.
Maternity, paternity, sickness and other protected leaves
Maternity is at least 18 weeks, paid through the healthcare system; fathers may use subrogation routes and get special cases. Paternity equals eight working days fully funded.
For sickness: the employer pays the first two days at 100%. Days 3–90 are paid at 66% by healthcare; 91–180 at 50% by healthcare; 181–360 at 50% by pensions; after 360, 50% by healthcare. Occupational incidents are 100% covered by ARL.
Documentation and operational notes
Licensed practitioner certifications trigger payments and reimbursements. We recommend tight workflows so HR logs leave promptly and managers plan headcount for weeks of absence. Clear records protect employees entitled to payments and reduce disputes under the law.
Pensions and long-term security: current rules and the 2025 multi-pillar reform
We outline how current retirement rules work and what the July 2025 reform will change for payroll and long-term income security.
Today, the pension charge is split: 12% from employers and 4% from employees, applied up to a 25 SMMLV cap. A solidarity surcharge of 1%–2% applies for incomes above 4 SMMLV.
Current contributions, caps and solidarity surcharges
The present setup within the social security system demands accurate withholding and reporting so payroll matches legal rates.
Records must show contribution bases and any solidarity surtaxes to avoid penalties.
From July 2025: pillars, Colpensiones and the 2.3 SMMLV threshold
Law 2831 of 2024 creates a multi-pillar model effective July 2025. Contributions will route to Colpensiones for earnings up to 2.3 SMMLV.
Income above that threshold is allocated to individual savings with private administrators, changing how payroll allocates each payment to the proper fund.
Survivors’ and disability pensions: rules and eligibility
Survivors typically receive 45% of the wage plus 2% for each 50 weeks beyond 500, capped at 75%. Survivors of current pensioners receive 100% of the pension amount.
Disability pensions depend on age, weeks of contributions and a medical assessment showing >50% loss of labor capacity.
- Action: update payroll logic to split amounts by threshold.
- Action: document individual choices and track income bands.
- Action: flag high-risk roles since occupational risks can affect retirement timing and surcharges.
Healthcare and insurance coverage: EPS basics and when to add private plans
We clarify core healthcare coverage under the EPS and practical reasons to add supplemental plans.
What the Obligatory Plan of Healthcare (POS) covers via EPS
The POS guarantees core medical services through EPS networks and IPS providers. Coverage includes hospital care, primary consultations, lab tests, and prescribed treatments.
Funding comes from contributive payroll shares and a subsidized track for those who cannot pay. We must keep mandatory remittances even when offering extra plans.
Supplemental health options: prepaid, policies, and complementary plans
Organizations add prepaid medicine, private insurance policies, or EPS complementary plans to speed specialist access and expand coverage.
- Prepaid plans: faster appointments and broader networks.
- Insurance policies: cash benefits, executive cover, and portability.
- EPS complementary plans: fills gaps inside the mandatory system.
Practical note: dependents—spouses and children—can be included under tiers we design. Coordinate claims so POS and private plans work without duplication.
Decision tip: evaluate value by expected response time, network reach, and the total amount charged per user, not only by premium cost.
Beyond compliance: supplementary benefits and market trends in Colombia
Many firms complement payroll obligations with voluntary plans that protect families and boost retention.
Life, dental, and funeral plans remain the most common add-ons. Life cover often equals 12–24x monthly salary. Dental plans prioritize large networks with high in-network coverage. Funeral plans frequently cover 100% for in-network providers, giving peace of mind to staff and their families.
Flexible, personalized programs and well-being services
We design flexible packages so individuals pick the options that matter most. Choice plans increase engagement and reduce churn.
Well-being services now include mental health counseling, virtual therapy, and resilience workshops. These programs lower burnout and improve productivity.
Company cars, small bonuses, and food or transport perks
Tangible perks such as company cars for travel roles, prepaid cards, meal allowances, and transport support raise day-to-day satisfaction. Small, regular rewards often beat one-off gifts for morale.
Additional savings, check-ups, education support and loans
We recommend tax-advantaged additional pension plans, annual medical check-ups, and short-term loans (commonly up to one month’s pay) to support financial well-being.
Education support — for example, 50% of postgraduate fees with a retention clause — aligns development with retention goals.
New risk fronts: mental health and cybersecurity
Mental health is now central to program design. Preventive services and timely access reduce sick leave and improve focus.
Cybersecurity is an HR-adjacent risk. We advise policies, training, and clear protocols to protect staff data and reduce incident risk.
For a practical guide on structuring these offerings and their payroll impact, see our resource on compensation and benefits. Además, es importante considerar la implementación de programas que fomenten el compromiso de los empleados, como la oportunidad de liderazgo en equity tokens. Estos modelos no solo aumentan la retención del talento, sino que también alinean los intereses de los empleados con los objetivos de la empresa. Evaluar una estrategia integral que incluya estos elementos puede ser clave para el éxito organizacional.
Budgeting and tax: what benefits cost and how to optimize employer spend
This section gives finance teams a clear model to forecast payroll charges and tax impacts across wage bands.
Typical total cost load and risk-class variation
Employer contributions commonly add 30%–50% to base salary. The exact amount depends on the ARL risk class and job function. Estos costos adicionales deben ser considerados cuidadosamente en la planificación financiera de la empresa. La contratación y costos asociados pueden variar significativamente dependiendo del sector y el nivel de especialización requerido para el puesto. Por lo tanto, es crucial evaluar no solo el salario base, sino también el impacto de estas contribuciones en el presupuesto total de la empresa.
Higher risk classes raise the ARL rate and push total cost toward the upper bound. Lower-risk roles can keep outlays near the 30% mark.
Exonerations and line-by-line mapping
Companies that declare income tax may qualify to exonerate healthcare, family, and other items for workers up to 10 SMMLV. When eligible, the employer share can fall toward ~17% of the contributory base.
Finance should map each line: healthcare, pension, ARL, and CCF. That lets us forecast the amount by wage band and by headcount.
- Model total rewards as salary plus a 30%–50% load baseline.
- Flag payroll near the minimum wage and 2 SMMLV for transport allowance impact.
- Set quarterly audits and year-round checkpoints to catch rate or class changes.
Practical tip: negotiate premiums and EPS-complementary contracts to match utilization and control the annual amount paid.
Your next steps to stay compliant and competitive in Colombia
A practical first move is to confirm affiliations to EPS, pension, ARL and CCF and to test payroll routing before the next pay run. Validate PILA files and ARL codes so withholdings flow correctly.
We recommend a compliance calendar that notes prima dates, severance deposit cutoffs, public holidays, and recurring paid leave cycles. Document maternity and paternity procedures so approvals and reimbursements run smoothly.
Assign owners in HR, payroll, legal and finance for each process. Audit contributions, reconcile wage bases, and map staff to Colpensiones or private funds ahead of July 2025.
Finally, pick insurance partners to strengthen health insurance access and keep policies updated. Small controls now prevent large penalties later.
