How Colombia’s pension system is integrating crypto
Colombia’s pension funds are making crypto increasingly available to investors in a bid to widen the array of options available to them, making it one of the earliest adopters in Latin America of this asset class (Daniel Munoz/AFP via Getty Images)
Colombia’s pension industry is taking a careful step into crypto, not by asking savers to open wallets or trade on exchanges but by packaging bitcoin exposure inside the same retirement platforms where millions already hold long-term savings.
To understand why this matters, it helps to know how Colombia’s system works. The country’s large private pension managers — the Administradoras de Fondos de Pensiones, or AFPs — sit at the center of two different worlds. One is the mandatory system, where formal workers make required contributions and the money is managed in regulated, risk-tiered multi-fund structures (typically conservative, moderate and higher risk).
The other is the voluntary pension system, a more flexible savings platform where individuals can choose from a wider menu of strategies and use the account for long-horizon investing goals. The crypto movement is happening in this second, voluntary lane.
In late 2024 AFP Skandia, which oversees approximately $10bn in client assets, launched a bitcoin-linked portfolio for voluntary pension savers, making it the first AFP in Colombia to place bitcoin exposure inside a pension product. The structure is deliberately institutional: rather than holding bitcoin directly, Skandia built the portfolio mainly through a spot bitcoin ETF, which tracks bitcoin’s price by holding it in custody, removing the need for end investors to manage private keys.
Skandia’s head of LatAm investments Jaime Álvarez says the company concentrates the exposure in BlackRock’s iShares Bitcoin Trust ETF, pointing to what he describes as operational strengths as the deciding factors. “These ETFs are very new, so there isn’t much history to compare,” he says. “The BlackRock vehicle had characteristics that tilted us toward it, scale, size and liquidity.”
That “wrapper-first” mindset shows up in the mechanics. Skandia’s portfolio has a minimum allocation that keeps most of the money (75 per cent) in IBIT while the rest functions as a practical buffer for day-to-day inflows and outflows. “It’s basically a liquidity issue,” Álvarez says. “We left that cushion because, being such a new portfolio, we didn’t have full clarity on what inflows and outflows would look like.” The goal, he adds, is straightforward: track bitcoin closely. “What we want is a replication as close as possible to bitcoin’s market price.”
If the product design is about tracking, the real question becomes risk. Nobody is pretending bitcoin behaves like a typical pension holding. Álvarez’s approach to risk management is less about smoothing volatility and more about shaping expectations and preventing oversized bets. “Seeing 5 per cent up or down in a single day is becoming normal,” he says, adding that bitcoin should remain a small slice inside a diversified retirement portfolio. “Allocations definitely shouldn’t be above 2 per cent or 3 per cent of a diversified voluntary pension portfolio.”
AFP Protección, Colombia’s largest pension manager, is now moving in the same direction. The company oversees about $63bn in client assets and has just launched a bitcoin portfolio for voluntary pension clients.
Like Skandia, Protección is taking the ETF route — and is also starting with BlackRock’s iShares Bitcoin Trust as the underlying exposure.
Chief investment officer Felipe Herrera frames the decision as part of a broader push to widen the opportunity set available to voluntary pension savers, particularly those who want to consolidate their long-term investments in one place and have the risk tolerance to handle a highly volatile asset. The company’s pitch is not that everyone should own bitcoin, but that the platform should be able to accommodate it for the subset of clients who have “the required knowledge and the capacity to tolerate risk”, as he put it.
Bitcoin, in Protección’s view, is landing alongside a wider “alternatives” toolkit the firm has been building out for clients who want diversification but remain drawdown-sensitive. Herrera described closed, principal-protected solutions that give clients upside exposure to baskets combining assets such as US equities, US Treasuries and gold, as well as structures offering direct gold exposure for investors looking to hedge geopolitical risk and broader market uncertainty.
The emphasis is on sizing. Herrera points to what he calls empirical patterns among high-net-worth clients and a relatively small set of institutional investors: allocations tend to stay in low single digits. “The evidence suggests allocations of between 1 per cent to 3 per cent of maximum total wealth,” he says. It’s a blunt message, but arguably the only one that fits a retirement context.
Taken together, the two launches mark a shift in how bitcoin is being introduced to long-term savers: through regulated vehicles, wrapped in the familiar plumbing of asset management, and surrounded by suitability language rather than hype. Colombia isn’t the first country in Latin America to experiment with crypto exposure, but its major pension administrators are among the early adopters that are trying to make bitcoin investable inside a retirement savings structure, with clear guardrails.
Whether this becomes a lasting trend will depend less on launch-day interest and more on what happens during the next sharp downturn. If clients treat bitcoin as long-horizon capital, keep the position small, and accept volatility as the price of admission, these products may settle into the pension toolkit as a niche diversifier.