- For Protección, severances, more than a social benefit, are the opportunity that Colombians have to achieve the fulfillment of their goals associated with a new beginning in terms of education and housing.
- Severances have been one of the great beneficiaries of the current economic cycle, yielding high returns.
- As of December 2023, 42% of severances withdrawals were allocated for the purchase and improvement of housing, 9.8% for education, and 46% for unemployment insurance.
- Protección makes technological tools available to its clients so that they can manage their severances in an agile and secure way.
Medellin, January 18th, 2024. Severances, a benefit that formal workers receive every year and that is equivalent to one month's salary per year worked, become one of the greatest drivers that workers in Colombia have to achieve transcendental goals such as acquiring housing, obtaining access to education and strengthening personal savings.
As of December 31st, 2023, 46.6% of the severances withdrawals made by Protección’s clients were due to contract termination, which transforms them into a financial support mechanism that people have in periods of unemployment.
Protección also reported that 9.8% of its members made withdrawals for educational issues, 10.2% for home purchases, and 32.2% to finance home improvements. Compared to 2022, a growth of 1.87% is observed in the withdrawal of severances payments for the purchase or improvement of a home, and an increase of 0.2% in the use of severances payments for educational issues.
“According to the figures of recent years, the trend is that 30% of the severances that are recorded each year are withdrawn between the months of February and March, therefore, in Protección, we generate awareness so that workers make appropriate use of this savings mechanism and only withdraw it when necessary, so that they can take advantage of the performance cycles”, says Ángela Maya, leader of the Protección’s Retirement Savings business.
On the other hand, at the end of 2023, Protección’s clients withdrew 17.2% more in severance money compared to the previous year. These data reflect the continued interest of Colombians in using severances to improve their quality of life and job opportunities.
Good moment for the profitability of severances.
Regarding profitability, the high inflation scenario of the last year caused the Bank of the Republic to raise interest rates to the maximum in 20 years, 13.25%, which modified all market interest rates, including the most conservative ones. This helped the short-term portfolio of severances in Protección to obtain, according to the latest report from the superfinancial institution as of October 31st, 2023, a three-month accumulated profitability of 13.86%*, which represents 4.58% higher than the closing inflation figure for 2023. Considering that the allocation made by employers on February 14th enters the short-term portfolio, severances will continue to be the great beneficiaries of the cycle that the market is still experiencing.
When is time to withdraw severances, Protección guarantees people an agile and effective process. “The company, supported by technology, the banking network, and its allies, offers services that simplify the use of these resources for people to achieve specific goals. The user must only present the required documentation depending on the case, whether for housing, education, or unemployment, and Protección will take care of the rest. This includes cybersecurity processes such as biometric facial identity validation, an evolution in which we are pioneers and that allows us to mix agility and security in the same cycle” says Maya.
In accordance with the regulations established by Law 50 of 1990, Protección reminds employers that severances must be submitted before February 14th, and failure to comply with this deadline may result in penalties for late payment. To facilitate this process, the company has an efficient platform that allows payments to be made in a timely manner, either through manual or mass spreadsheets. Enter your secure platform available at protección.com
Protección reaffirms its commitment to continue supporting Colombian workers in achieving their goals through severances, thus contributing to the economic and social well-being of the country.
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About Protección:
Protección S.A. is an expert company in savings and investment, with 30 years of experience in the administration of resources for more than 130 trillion pesos from 8.3 million clients of Mandatory, Voluntary, and Severance Pension funds and more than 73 thousand pensioners. The company has transcended its category, energizing the focus of its business on the management of assets destined for mandatory pensions and severances, to take it to the next level that involves the mobilization and management of savings to be an ally of its groups of interest with the purpose of accompanying them in the fulfillment of their dreams and construction of their future.
Edelman press contact:
Andrea de la Torre, Edelman Colombia
Tel. 310 2104026
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Aura Quilindo, Edelman Colombia
Tel. 3146876183
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