WILLEMSTAD — If no action is taken now we cannot guarantee payment of pensions on the island in the future, Minister Hensley Koeiman (Social Development, Employment and Welfare, MAN) said yesterday during a press conference, referring to the decision of the Council of Ministers to increase the retirement age from 60 to 65 years.The decision to increase the retirement age departs from the fact that the people who are 58 years of age on January 1^st of this year, will retire at the age of 60. Those who are 57 or younger will retire when they turn 65. In addition to this measure, the government also choose to increase the wage level from 83,000 to 100,000 guilders with the result that more people will contribute toward the fund of the pension insurance (AOV). During the press conference, Koeiman explained that something must be done to guarantee the fund’s financial situation in the future.

Mounting deficit

According to the Minister, with an unaltered policy, the fund will show a deficit of over 3 billion in twenty years. The high unemployment, the growth of the population failing to materialize, combined with the proportional increase of the ageing population, will only increase the pressure on the AOV-fund in the future. For that reason, the Pension Committee under command of Victor Monk (sector director Social Development) was appointed to present suggestions on guaranteeing the fund in the future. The committee is to present recommendations that will not have any consequences for the economic development and the government’s tax plan, but also take the welfare of senior citizens into consideration.

Committee chairman Monk, indicated yesterday that at first he strongly opposed the increase of the retirement age, but after studying the various options, he concluded other options are not feasible. No other options are feasible.

With the so-called scenario model AOV, actuary Laurens Keesen, presented the various calculations regarding the fund yesterday. An unaltered policy will lead to a surplus of 51 million guilders in five years, but in ten years, this will change to a deficit of 546 million, increasing to 3.6 billion in twenty years. The suggestion of the Council of Ministers will lead to a surplus of 98 million guilders in both five and ten years.

Economic growth

However, Keesen remarked that this can only be realized with an economic growth of 2.5 percent per year. In this respect, Koeiman also emphasized the importance of economic growth. A gradual increase of the retirement age, whereby citizens of 53 years will be the first to retire when they turn 65, is not an option either, said Keesen. In five years, this will yield a surplus of 72 million but in ten years this will be a deficit of 222 million guilders.

Koeiman indicated yesterday that the adopted increase is the best option. He pointed out that the decision could have been taken sooner but that the previous governments had not done so. The Minister admitted that the increase will be painful for some, but he also indicated that people will soon have the possibility to retire earlier. However, this means those retiring earlier and choosing for an AOV-payment, will receive a percentage (6 percent per year after the age of 60) for the rest of their life.