This system was created by the Colombian State in 1957 through decree 118 of July 21st, which sets forth that all of the country's companies, both private and government-owned, should contribute a sum equivalent to 4% of the monthly payroll to meet the services and programs defined for the Family Subsidy System.
The intention of the Family Subsidy is that through the benefits generated by the capital, the wage-earners receive solidarity and comprehensive help, so that those that earn a higher salary aid the lower-income employers. Thus, those that earn less can receive a higher retribution in money, goods or services, according to their number of dependants.
The contributions that the Compensation Funds receive from employers represent today only 35% of the Funds' income. In addition to these contributions, financing of the Family Compensation Funds rise from the sale of their services, from their alliances with local and regional governments, from the signing of national and international cooperation agreements, and from financial yields. The Funds' orientation, control and supervision are governed by the State, through the Family Subsidy Superintendence.
Figures updated at December 31, 2005 in accordance with data of the Family Subsidy Superintendence.