Early withdrawal of severance pay is no longer exclusively for buying property, home remodeling, and university payments.
Recently, Law 1809, from 2016, was passed. Planned savings, or insurance policies aimed at pre-paying their children’s universities years before they attend is a new option that Colombians have for their severance pay.
There are several groups of Colombians that can take advantage of this new benefit: (i) contributors that have children or dependents up to 18 years old; (ii) contributors with dependents between 18 and 25 years old that have insurance or savings plans to pay for higher education or professional or technical degrees in widely recognized institutions; and (iii) contributors with children or dependents over 25 years old that have a physical or psychological dependence.
How do you withdraw the severance pay to guarantee your children’s university payments?
According to the law, these include “properly established and recognized severance funds that are set up to facilitate, promote, offer for sale, develop, negotiate, and report on insurance products in the field of education, including programs with ongoing savings for the future payment of the college education of the members’ children or dependents.”
In actuality, when members request a partial withdrawal of severance pay for their child or dependent´s higher education for use as planned savings or education insurance, the employer should analyze the request. They need to analyze the information submitted by the worker. If approved, the respective severance fund will wire the money directly to the relevant entity where the planned savings takes place or to the insurance company through which the worker purchased the education insurance.
Take into account…
The benefit applies for university or technical studies. The only condition is that the educational institution is duly recognized by law.
Author: Marlén Quintero