Partial Withdrawal of Severance Pay for Housing in Colombia: Requirements, Documents, and 2026 Process

How to Release Your Labor Savings for Housing Without Ending Your Contract

Many formal employees in Colombia are unaware that they do not need to resign or wait until they are unemployed to take advantage of the capital saved in their severance fund (cesantías). If you are thinking about buying a home, building on your own lot, making repairs to your house, paying down the principal on your mortgage, or paying property taxes, Colombian labor law allows you to perform a partial withdrawal of severance funds in a 100% legal and direct manner.

Unlike severance pay upon contract termination, a partial withdrawal during the term of the employment relationship requires justifying the exact destination of the funds. At Colombia Move, we have prepared this practical guide so you can learn about the documentary requirements, the maximum disbursement period required for pension funds (AFP), and the exact model of authorization letter your employer must issue to avoid re-processing.

According to active ads on Colombia Move (August 2026), there are 41 apartment listings and 14 house listings, plus 44 furniture listings; those remodeling with severance funds often browse these lists for supplies and household items.

2026 Legal Framework: Employee Rights and Disbursement Terms

The partial withdrawal of severance funds for housing is protected by Article 256 of the Substantive Labor Code and Article 102 of Law 50 of 1990, regulations detailed by Decree 1072 of 2015 and Decree 1562 of 2019 of the Ministry of Labor.

It is key that you know the two golden rules that guarantee the agility of this administrative procedure in 2026:

• Employer responsibility (Decree 1562 of 2019): The company or employer has the legal obligation to verify and confirm that the supporting documents presented by the worker are genuine and correspond to one of the housing causes authorized by law, before issuing the authorization.
• Mandatory 5-business-day payment term: In accordance with Article 21 of Law 1429 of 2010 and Paragraph 2 of Decree 1562 of 2019, the Pension and Severance Fund Administrator (Porvenir, Protección, Colfondos, Skandia, or the Fondo Nacional del Ahorro - FNA) or the employer itself has a maximum term of five (5) business days to make the payment once the application with the complete documentation has been filed.

Authorized Uses for Partial Severance Withdrawal

Colombian regulations strictly limit the use of severance funds in the real estate sector to protect the worker's savings. The approved cases for the partial release of these resources are as follows:

1. Acquisition of housing or a lot: Purchase of a house, apartment, project under construction, or urban/rural land.
2. Housing construction: Building on a lot or terrace owned by the worker or their spouse / permanent partner.
3. Remodeling, expansion, or repair: Improvement works, changing floors, minor repairs, painting, waterproofing, or finishes.
4. Amortization or release of mortgage liens: Partial or total payment of the balance of a housing loan or housing lease.
5. Payment of property tax (impuesto predial): Payment of the unified property tax bill corresponding to the residence property.

Important note: The law allows the use of severance funds for properties exclusively owned by the worker or shared with their spouse or permanent partner. To validate this reason, you must attach the civil marriage registration or a statutory declaration proving continuous cohabitation of no less than two (2) years.

Documents Required According to the Type of Request

To prevent the Human Resources department or the severance fund from returning your request, ensure you attach the complete file according to your specific case:

1. For Purchase of Housing or a Lot

• Copy of the worker's identity document enlarged to 150%.
• Promise of sale agreement for the property, signed by both parties.
• Copy of the Certificate of Tradition and Freedom of the property.

2. For Remodeling, Repair, or Housing Improvement

• Authorization letter issued by the employer on letterhead.
• Copy of the Certificate of Tradition and Freedom of the property, with an issue date not exceeding thirty (30) calendar days at the time of filing the request.
• Civil work contract signed with the foreman, contractor, or responsible company.
• Detailed quote or budget for labor and materials.
• If the remodeling involves major structural modifications, the law requires you to have the construction license for remodeling approved by the Urban Curator.

3. For Payment of Mortgage Loan or Property Tax

• Recent bank statement from the financial institution showing the mortgage debt balance and the loan number.
• Current property tax collection bill issued by the local mayor's office or corresponding treasury secretariat.

Structure and Model of the Employer Authorization Letter

The most critical document in the process is the letter issued by your company or employer. If the letter omits the required legal citations, the AFP will automatically reject the disbursement of your funds. The communication must be written on letterhead signed by the legal representative or the Human Resources director and include:

• Full name of the worker and citizen ID number.
• Exact amount or value in pesos (COP) that the employer authorizes to withdraw.
• Specific purpose of the funds (example: "Remodeling and painting of personal residence").
• Full address and property registration number of the property.
• Explicit citation of regulatory compliance: "The employer commits to verifying that the worker uses the accumulated funds for the purposes provided for in Article 256 of the Substantive Labor Code, in accordance with Decree 1562 of 2019 and Article 21 of Law 1429 of 2010".

Step-by-Step for the Digital Procedure with AFPs

Nowadays, the Severance Fund Administrators (Porvenir, Protección, Colfondos, Skandia, and FNA) allow you to file the application 100% virtually without waiting in lines in person:

1. Internal approval: Deliver the supporting documents for your project (quotes, certificate of tradition, and work contract) to the Human Resources department of your company to obtain the signed letter.
2. Registration on the web portal: Log in to your AFP's virtual branch using your member username and password.
3. Uploading documents: Select the "Partial Withdrawal of Severance Pay for Housing" option and attach the company letter, your ID, the Certificate of Tradition and Freedom (<30 days old), and the contracts or quotes in PDF format.
4. Bank account registration: Register an active bank account (savings or checking) in your own name to securely receive the electronic transfer.
5. Disbursement: After validating the files, the AFP will transfer the funds to your account within the statutory 5 business days.

Security Alert: Zero Tolerance for Illegal Facilitators

The process for partial withdrawal of severance pay from AFPs and the National Savings Fund (Fondo Nacional del Ahorro) is completely free of charge. On the internet and social media, there are many offers from "facilitators" who promise to withdraw severance pay in exchange for commissions ranging from 10% to 20%, or through the creation of fake work contracts or purchase agreements.

Engaging in this practice constitutes a criminal offense of forgery of private documents and fraud. Additionally, Paragraph 1 of Decree 1562 of 2019 authorizes employers and funds to audit the works, meaning that falsifying supporting documents can lead to the employee's termination for just cause and legal action before the Attorney General's Office (Fiscalía General de la Nación).

Frequently Asked Questions

❓ How long does it take for the severance fund to disburse the money for housing?

The fund or the employer has five (5) business days to pay after the request is completed. This deadline is set by Decree 1562 of 2019, consulted on August 29, 2026, in Función Pública; Human Resources may take a few extra days before signing.

❓ Can I withdraw my severance pay to remodel a house in my spouse's name?

Yes: it applies to your own home, your spouse's, or your permanent partner's home. Attach a civil registry or a declaration of cohabitation of at least two years, according to the Ministry of Justice (consulted on August 29, 2026); it does not cover parents or siblings.

❓ What mandatory information must the employer's authorization letter contain?

It must be on letterhead, including the name, ID, amount, purpose, and a citation of Article 21 of Law 1429 of 2010. That citation is what AFPs require; Función Pública (August 29, 2026) supports the associated disbursement deadline.

❓ What is the maximum validity of the Certificate of Tradition and Freedom for the process?

It cannot be more than thirty (30) calendar days old at the time of submission. This is required by the Ministry of Justice/LegalApp (consulted on August 29, 2026); if it expires, request a new one from the Registry Office.

❓ What documents must I present to request the withdrawal of severance pay to repair my home?

Employer's letter, certificate less than 30 days old, work contract, and material quote. That package is detailed by the Ministry of Labor (concept 02EE2022410600000012877, consulted on August 29, 2026) for repair or improvement.

❓ Does the process for partial severance withdrawal have any cost?

No: the process with AFPs is free and does not require facilitators. Commissions of 10% to 20% or fake contracts are fraud, according to operators like Porvenir (consulted on August 29, 2026) and Decree 1562.