Abstract
We take a simulation approach to study the Public-defined Benefit Plan (Regimen de Prima Media) in Colombia using a Present Value method of benefits and contributions. We also propose a Pension scheme with Matching Contributions. Some consequences of this new regime are an increment for the proportion of people that achieved a minimal salary as pensions, less variability in the expected amount of the present value of the difference between benefits and contributions, as well a significant transfer of wealth to middle- and lower-income classes.
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