Council urges structural changes to secure Curaçao’s pension system amid aging population
WILLEMSTAD - The Sociaal-Economische Raad (SER) has expressed support for restoring indexation of the AOV (General Old Age Pension) to the Consumer Price Index (CPI) but warns that structural reform is essential to make the pension system socially fair and financially sustainable in the long term.
In a recent advisory opinion responding to a proposal from the MAN-PIN parliamentary faction, the SER agreed that AOV payments should once again move in line with inflation, as was the case before 2013. At that time, AOV benefits were tied to the CPI, ensuring automatic adjustments based on cost of living. However, since 2013, the pension amount has been linked to economic growth, which effectively froze the benefit for years, as the island’s economy saw little to no expansion.
That has now sparked renewed debate. Under recent MFK-led governments, Curaçao has experienced positive economic growth, meaning the AOV payments should legally have increased — something that has not yet happened.
The SER acknowledges that the current AOV structure is unsustainable, given the island’s aging population and the shrinking number of active workers who contribute to the pension fund. “Multiple financing sources will be needed to cover the existing shortfalls,” the Council emphasized, suggesting that a single approach — such as simply raising the premium or the retirement age — would not be sufficient.
While the SER supports the MAN-PIN proposal to reintroduce indexation, it stresses that a comprehensive reform of the pension system is urgently required. The Council calls for a combination of measures, including the formalization of the informal labor market and the registration of undocumented migrant workers, which could significantly broaden the contribution base.
“A legalization and registration strategy could substantially expand the premium base and strengthen solidarity,” the SER stated, “provided it is anchored in a solid policy framework with quality entry criteria and structural monitoring.”
In addition, the Council recommends the creation of a mandatory second pension pillar — a basic occupational pension for all workers to complement the AOV. This second-tier system, according to the SER, would help protect living standards in retirement and should be introduced gradually, in coordination with social partners.
The SER concludes that while returning to an indexed AOV is an important first step, only a multi-pronged and inclusive reform can ensure the long-term sustainability and fairness of Curaçao’s pension system.
