Designed as a savings tool for workers that provides protection in the event of job loss, layoffs also open up many opportunities for those who know how to take advantage of them either in the purchase or improvement of housing or for education.
In the framework of the pandemic, they were an important financial support for workers who were laid off or had a reduction in their income.
According to data from the Colombian Association of Pension and Severance Fund Administrators (Asofondos), during 2020 more than 1.5 million workers used their severance pay, withdrawing a total of $ 2.6 billion, due to decreased income and termination of the contract.
In turn, the president of the National Savings Fund (FNA), María Cristina Londoño Juan, assures that in 2020 they processed 609,837 applications worth $ 1.83 billion. “The main destination of these withdrawals continued to be the acquisition, improvement or release of a home, as happened in 2019,” he says.
Explain that both withdrawal operations and the value of severance pay withdrawn in 2020 decreased compared to 2019. “However, the only item in which they increased was that of application to the credit granted by the FNA, which reflects the good behavior of our financial consumers and the importance that Colombian families have been giving to saving,” he says.
Andrés Vásquez, commercial vice president of Provenir, indicated that the collection for unemployment in 2020 was $ 15 billion and stressed that this benefit was a fundamental help for workers in the midst of the crisis generated by the pandemic. “The great advantage of having this savings is that it is a social benefit that is used when it is needed and as its name indicates it is for when it is unemployed ”, he adds.
What are they used for?
Severance payments can be used to finance the affiliate’s education, that of his / her spouse or permanent partner or of their children, in higher education entities recognized by the State.
Also to buy, build or make improvements to the home.
In the midst of the pandemic, the Government authorized the withdrawal to compensate for the decrease in income while the emergency for the Covid-19 pandemic is in force.
“They can be used for the purchase of new or used housing in the modalities of credit or housing leasing,” says the president of the FNA.
They can also be withdrawn when performing military service, to make payments to credits in the case of the FNA or to release the mortgage lien.
Another use is for the purchase of shares owned by the State and, in general, of its participation in the capital stock of any company.
In the event of the member’s death, this social benefit will be delivered to their family members, in accordance with the provisions of the Law.
Steps to withdrawal
In the case of retirement due to income reduction, workers must provide a letter from the employer certifying the reduction. This option is available for workers with unpaid leave, suspension of the employment contract, or decrease in salary by mutual agreement in the context of the pandemic.
The withdrawal procedures can be carried out at the physical offices of the severance fund or the FNA or through their web portals.
Severance withdrawals apply to accounts with a positive balance and that they have no pledge or embargo.
In the case of housing, education and others, each entity offers the instructions online with the documents required for each concept.
Asofondos affirms that this saving should be thought of as a long-term one that serves to face a work contingency, such as being out of work.
“No one is exempt from suffering this circumstance, which has not yet lessened as long as the pandemic persists; and layoffs are the best savings for the person to cope with this situation and not be affected in their level of consumption, “he says.
For her part, the president of the FNA said that “The best investment you can make in 2021 is to use your severance pay to apply for your mortgage loan and, incidentally, take advantage of the subsidies offered by the national government through the Ministry of Housing ”.
In turn, the commercial vice president of Porvenir, highlighted the good use that Colombians gave to saving their unemployment during 2020 and called for them to continue doing so this year, since the most convenient thing is to use these resources to solve moments of labor instability or to carry out projects related to housing and education.