Published On: Fri, Jan 24th, 2020

“To Raise our Pension Age or Not is complicated. But, there is room for compromise.”

Letter - St Maarten News - PeopleDear Editor,

The rights of older persons to social benefits and to an adequate standard of living to support their health and well-being, including medical care and necessary social services, are laid down in the major international human rights instruments, the Universal Declaration of Human Rights (UDHR), 1948, and (in more general terms) the International Covenant on Economic, Social and Cultural Rights (ICESCR),

The question then becomes more complicated, than to raise or not raise the pension age. The question becomes; how prepared is St. Maarten from a demographic point of view to take care of its pensioners and give them this adequate standard of living. As things become costlier, our life expectancy changes, our birth rate changes, and the dynamic of our labor market changes, are we inclined to continue to raise the pension age?

We are challenged for the future to ensure that our people can grow old with security and dignity and that their rights are not incompatible with other groups such as persons aged 30-61 years old. With this challenge in mind, I believe some things have to be sincerely considered by our government, such as population growth, population ageing, and the effects of demographic change on our economy. We must be proactive in collecting this data; so that our government can make informed decisions much faster, make predictions, and examine both short term and long-term impacts. St. Maarten cannot afford to develop policies blindly, without seeking the best alternative and without supporting research.

Undoubtedly, increasing the pension age is a sensitive topic and has both its advantages and disadvantages. The policy options for Sint. Maarten are few, and given the fiscal sustainability in these matters, the policy options are as follows:

· Younger people pay a more significant share. However, this would be unfair given the current cost of living and requires much caution in regards to the intergenerational relations. Besides this, young people are most likely in a position to relocate to where labor prices are more favourable, and costs are lower.

· The increasing pension age has its consequences but might be fair in the interest of Sint Maarten fiscal balance and ageing challenges. Furthermore, research has shown that life expectancy has increased to 80 year of age and is likely to continue to increase. Besides, St. Maarten would be in line with an international standard. However, there are some negative impacts of the increase. Lower-income or people in physically demanding jobs, people who are more incline to be in poorer health, may not be able to extend their work life. Therefore, these individuals may opt to secure another social benefit. Additionally, pension age increase will increase the quantity of labor on the market and thus affect the unemployment rate, especially amongst young people, and even the price of labor. Furthermore, we may see lower productivity, hence, less willingness from the private sector to hire persons of a certain age.

There may be more social-economic effects unique to St. Maarten, but to mitigate these effects, more research is required to identify these effects.

Other options include the encouragement of private savings and private sector pension funds. In which the private sector is encouraged to secure a pension fund for their employees in a joined contribution for employers and employees. Eventually, this is something that should be mandatory. Additionally, ensure that these efforts are tax-deductible. However, this solution is a long-term solution, and, in the short-term, this does not take care of persons who do not have the time to build this pension fund and savings.

In the short term, the following is recommended:

· A scheme that sets the retirement age at 65, however, gives an option to retire at 62 without full benefits, or a percentage of benefits. This is an internationally accepted standard for retirement.

· Focus on cost-cutting measures and exploring other financial avenues such as tax reform to be able to finance and develop programs that increase support for pensioners in kind: such as food stamps, gas vouchers, bus fare subsidies, preventative health measures, health care, and transportation to health services. Also, ensuring that our social housing is allocated to our pensioners as a priority.

· Continuous assessment of the demographic changes, indexation and increase information between stakeholders as a foundation for decision making.

In conclusion, the choice to raise or not raise is not the question, but how we can compromise and prepare for the future is more important, and selecting the best alternative given the factors.

Lea A. Leslie

Leandra Leslie-Cyntje, MPA