(Bloomberg) -- Colombian lawmakers added a clause to a pension bill in congress that will allow fund managers to rake in an additional $750 million in management fees.

The senate approved a proposal this week that allows private pension funds to levy as much as 0.7% on assets under management in addition to the fee they charge upfront.  

The so-called obligatory pension funds covered by the change had 405 trillion pesos ($104 billion) under management and 19 million clients at the end of 2023. Currently, they charge a fee upfront but no annual management levy. 

The text didn’t specify over what period the new fee will be levied, though fund management costs are conventionally quoted in annual terms.  

In reply to written questions, Senator Gustavo Adolfo Moreno of the En Marcha political party, who proposed the change, said that he wanted congress to set management costs and not the government. 

He also shared the text of his proposal which says the changes will allow the private funds to remain financially viable as the government’s bill cuts private pension savings by moving more workers into the public system. 

Colombia’s Labor and Finance ministries, and Asofondos, which represents the private pension fund industry, didn’t immediately reply to messages seeking comments. 

Read more: Colombia Senate Votes Pension Threshold of 2.3 Minimum Wages

Petro Criticisms

President Gustavo Petro has repeatedly criticized private pension funds, claiming that their returns are too low, and that they should repatriate money invested overseas.  

Under the changes approved by the senate, the first chunk of salary, up to 2.3 times the minimum wage, will go into the public system, while the balance will go into the private system. Labor minister Gloria Ines Ramirez said Friday that she expects the senate to approve the full text of the pension reform on Monday after which the bill will be discussed in the lower house.

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