Published On: Sat, Feb 24th, 2024

CFT expresses concerns about future of old age pensions

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PHILIPSBURG — Financial supervisor CFT has expressed its concerns about the future of the old age pension (AOW) in St. Maarten. In a press release, the Cft notes that, starting in 2029, premiums will not be sufficient to cover AOW-payments to an ageing population. It advises the government therefore to take measures.

Another serious concern is the national budget. Since 2010 St. Maarten has not managed even once to present an approved budget to the Cft by the deadline of December 15 of the previous year. It urges the government to establish an approved 2024 budget by March 31.

The Cft has expressed its concerns about this situation more than once. For some reason the late arrival of a budget for the new year has become a structural problem.

“It is of the utmost importance that St. Maarten executes the already established plans of approach for the improvement of the budget process,” the Cft writes in a press release. “The Kingdom Council of Ministers has requested to establish the 2024 budget as soon as possible, but not later than March 31.”

The cumulative deficit of the healthcare and social funds was 274 million guilders ($153 million) at the end of 2022. St. Maarten is working on reforms to combat this deficit, but the Cft points out that postponing the reforms will result in an unsustainable situation with significant consequences for the national budget. Reforms can result in a shift from secondary to primary care and prevent patient’s needs for the more expensive secondary care, the Cft writes.

The financial supervisor points out that due to the ageing of the population the demand for old age pensions will increase significantly in the coming years. By 2029 premiums will no longer be sufficient to cover AOW-payments. “The Cft advises the government to take measures so that the pensions remain sustainable.”

St. Maarten does not do well in the field of capital investments either. In 2023, the country budgeted 90 million guilders ($50.2 million) for investments but a large number of projects were not executed. These investments are now scheduled to take place in 2024.

The Cft asks St. Maarten to take this into account in its 2024 budget and to create a multi-annual investment-agenda that describes available resources and the execution capacity.