WILLEMSTAD - The retirement age must be raised to 67 to secure AOV payments. This is the main message from researchers Koert van Buiren and Daniël van Vuuren, presented in parliament. Their report on the social security and social provisions of Curaçao underscores the urgency of this measure.
If the retirement age remains at 65, a third of the AOV expenditures will be unfunded by 2050, worsening the SVB’s situation. As of 2022/2023, AOV expenditures amount to 377 million guilders, while premium income is 323 million. By 2050, expenditures are expected to rise to 560 million guilders, with premium income only reaching 385 million.
The researchers state that delaying measures is not an option. “Reducing payments is not a solution. The most logical step is to raise the retirement age. This is not a popular measure but an inevitable one,” said Van Vuuren.
They advocate for raising the retirement age by 2030, allowing six years to adapt to the change and making the measure financially effective.
The researchers also mention other possible solutions, such as saving for personal pensions. However, this does not address the immediate financial problem for the AOV fund. Such measures would only have an effect in twenty to thirty years.
Poverty among those who only receive an AOV benefit is another problem. Therefore, the researchers recommend increasing the AOV to seventy percent of the minimum wage and introducing automatic indexation to ensure purchasing power.
Furthermore, the researchers propose aligning the retirement age in all sectors with the AOV age. After 2030, this age should be linked to life expectancy.
Aging Population
The research shows that Curaçao is ahead of the region in terms of aging. This is due to the emigration of young people and the longer life expectancy. When the AOV was introduced in 1960, life expectancy was 65 years; by 2021, it had risen to 79 years.
As a result, the number of retirees relative to the working population is relatively high. AOV expenditures continue to rise, and economic growth cannot fully compensate for this.
It is clear that without increasing the retirement age, the financial sustainability of the AOV is at risk. The researchers urge for swift and decisive measures to address this problem.