PHILIPSBURG--The AOV pension age in St. Maarten has been increased from 60 to 62, but those in the workforce nearing age 60 need not fear working longer.

 

The increase will take effect on January 1, 2018. The timeframe allows for working people ages 58 and 59 as of January 1, 2016, to retire at age 60. Those who are ages 56 and 57 as of the same date will retire at age 62.

 

Parliament passed the age increase unanimously on Monday evening, along with an increase to the pension.

 

Public Health, Social Development and Labour Minister Rafael Boasman told Members of Parliament (MPs) that reform of the pension system was necessary because 64 per cent of the elderly rely on “a rather low” pension payout. Also, current trends indicate some 30 per cent of the people who have turned 60 are continuing to work.

 

Government plans to follow up on the pension age increase by mandating a compulsory pension plan for all workers via a law, and to review the feasibility of a flexible (further) increase in the pension age.

 

The increase of the pension amount from NAf. 856 to NAf. 1,000 maximum for retirees was ratified with the passing of the law. The increased amount has been paid out to recipients since 2013. The passing of the law made the retroactive payments in conformity with the law. Also, the maximum amount has been further increased to NAf. 1,051 based on this year’s applied cost-of-living indexation.

 

The average benefit was about NAf. 500, due to non-residency of retirees in the country and the 45 years of residency in St. Maarten a worker needs to accumulate to qualify for the full pension amount.

 

Boasman said the plight of the elderly was compounded by only 36 per cent of the country’s elderly having an additional pension.

 

However, the elderly population is growing and living longer, he said, pointing to the need to increase the retirement age. The increase in the age also will aid in boosting the social fund for sustainability and longevity.

 

Socio-economic data project that pension payout will be higher than premium revenues as early as 2024, making is even more necessary to increase the pension age. The pension fund, managed by Social and Health Insurances SVZ, is based on a solidarity principle with those who are working paying for those of us who have retired.

 

Data from SZV in 2013 “showed an even more troublesome situation,” said Boasman. There was a NAf. 11.5 million higher payout of pension in 2013 than projected, with NAf. 12 million less premium revenue than forecast for the same year.

 

The retroactive increases also see partners, widows and orphans receiving more payout from the fund. The partner allowance has increased to NAf. 684, up from NAf. 586. Widow’s allowance now stands at a minimum of NAf. 461 and a maximum of NAf. 1,000. The former widow’s minimum was NAf. 395 and maximum was NAf. 856. Orphans receive a minimum of NAf. 365 and a maximum of NAf. 460. Those amounts are up from NAf. 287 and NAf. 394 respectively.

 

The income cap also has been increased from NAf. 77,000 to NAf. 100,000.