Unlike mandatory contributions, voluntary savings allow people to supplement their future pensions in a flexible manner, adapted to their personal goals and life cycles. This, today, is gaining greater prominence throughout the region thanks to its capacity to generate sustainable, innovative and customized solutions to the current demographic and employment challenges.
By Valora Analitik for Grupo SURA*
Latin America is undergoing an accelerated demographic transformation. The region is aging, but it is also moving towards a growing awareness of the importance of financial planning for old age. Amid this scenario, voluntary savings is emerging as a supplement to the mandatory pension system and as a catalyst for building long-term well-being.
According to the International Federation of Pension Fund Administrators (FIAP), the average replacement rate in the region ranges between 30% and 50%. While this highlights the need to strengthen retirement income, it also opens up the opportunity for tools such as voluntary savings to grow aggressively. In fact, several countries have made significant progress in this field, supported by product innovation, better tax incentives and new forms of digital savings.
Colombia, Mexico and Chile: three cases that demonstrate the dynamic growth of voluntary savings
Each country in Latin America faces different realities, but the opportunities for voluntary savings are increasingly clear. Colombia, Mexico and Chile, for example, show encouraging signs of being able to expand, diversify and adopt, to a greater degree, flexible pension products.
Colombia: voluntary savings are gaining ground amid a transformational environment
With the approval of a pension reform in 2024, Colombia is moving towards a more inclusive structure that is strengthening the solidarity pillar. Under these new conditions, voluntary savings is becoming especially relevant as a supplementary option. According to figures provided by SURA Asset Management, voluntary funds in Colombia grew by 19% in 2024, evidencing a greater awareness and confidence in this type of instrument. However, penetration remains low, with only 4% of the work force holding voluntary savings products.
Also, products such as AFC accounts (Savings for Construction Purposes) and Periodic Economic Benefits (BEPS) have been gaining ground as accessible mechanisms for different segments of the population. Pension Fund Management firms such as Protección already manage more than COP 13 trillion in voluntary savings, benefiting more than 570,000 Colombians.
"The savings culture is evolving. More and more young people and self-employed workers understand the value of starting to save early to achieve greater financial freedom in the future”, noted Andrés Velasco, president of Asofondos.
Mexico: steady growth of voluntary Afores and more solutions for workers belonging to the informal job market
Mexico has also taken firm steps towards greater pension coverage. The pension reform that began back in 2020, which included a gradual increase in employer contributions and a reduction in the number of weeks required to reach retirement age, has had positive effects. Added to this is a boom in voluntary savings: voluntary contributions increased by 22% in 2024, according to the National Commission of the Retirement Savings System (CONSAR).
Innovation has also been key: the Siefores have expanded their portfolios and include attractive products for young people, entrepreneurs and the self-employed. In fact, more than 10% of contributors already make voluntary pension contributions, a figure that is growing year after year.
"We are heading in the right direction. Digitization, financial education and new tax incentives are allowing more people to save on a voluntary basis,” stated Julio César Cervantes, president of CONSAR.
Chile: a consolidated pension culture and regional leadership in voluntary savings
Chile has been the region´s pioneer in terms of pension savings, and maintains one of the highest rates of voluntary savings: about 30% of contributors make additional contributions, according to the Chilean Superintendency of Pensions.
Despite the temporary impact of early withdrawals during the pandemic, the country has been able to rebuild confidence in the system through strong tax incentives, friendly digital platforms and a more developed financial culture.
"Voluntary savings is synonymous with freedom. In Chile we have demonstrated that with the right incentives and financial education, people are willing to build their future responsibly” stated Osvaldo Macías, the Chilean Superintendent of Pensions.
Three key drivers that are consolidating this trend in Latin America
The growth in voluntary savings throughout the region is not just the result of isolated efforts. It has been driven by a number of rapidly maturing structural factors that promise to further accelerate the adoption of this type of savings:
- Expanding financial education
According to FIAP, more and more countries are investing in financial education programs focused on saving for old age. Public, private and mixed initiatives have shown that improving an understanding of the system is key to fostering responsible decisions. Young people and women are leading this new wave of education through social networks, digital platforms and work place environments. - More competitive tax incentives
Chile leads the way with incentives of up to 15% in tax refunds for voluntary contributions, but countries such as Colombia and Mexico have also begun to strengthen these benefits, especially for the self-employed. The trend is towards harmonizing tax systems to encourage greater participation on the part of all segments of the population. - Technology and customization
Digitalization has been a key accelerator. Mobile apps, digital wallets and pension savings management platforms are allowing users to monitor, adjust and plan their savings that much more conveniently. Increasingly personalized products are also being developed, such as micro-pensions, pension insurance and flexible schemes according to the stage of the individual´s life cycle.
Towards 2030: a stronger and more participatory savings ecosystem
Current projections are encouraging. According to FIAP and the OECD, by 2030 we shall see:
- An increased participation on the part of young people in pension savings, thanks to digitalization and the personalized content available on social networks and at the work place.
- Regulatory improvements and expanding tax benefits for voluntary savings.
- More product diversity on the part of private pension fund management firms, this designed for different risk profiles and life cycles.
- Public-private partnerships that effectively expand access to voluntary savings in rural, informal and female populations.
Amid this scenario, voluntary savings are becoming an essential component of the new financial protection models in Latin America. For the region's financial ecosystem, this environment represents an opportunity for continuing to provide added value with flexible products, educational strategies, digital support and an increasingly inclusive offer towards being able to consolidate a more participatory, innovative and resilient environment.
The key to all of this is to continue inspiring people's trust, especially that of the new generations, and to demonstrate that voluntary savings is an answer to the current challenges and a powerful tool for building well-being, autonomy and peace of mind over the long term.
*This article was prepared by the Valora Analitik staff for Grupo SURA. Its content is of a purely journalistic nature and does not compromise any specific positions taken or recommendations made by our Organization.
