WILLEMSTAD – Curaçao’s AOV old-age pension system could accumulate a financing shortfall of more than XCG 492 million between 2026 and 2030 if no additional measures are taken, according to calculations from the Social Insurance Bank (SVB) included in an advisory report by the Social Economic Council (SER).
The figures show that from 2026 onward, projected AOV expenditures will exceed revenues every year under the assumptions currently being used.
For 2026, the projected deficit amounts to more than XCG 68 million. It then increases to almost XCG 83 million in 2027, more than XCG 98 million in 2028, nearly XCG 115 million in 2029 and almost XCG 129 million in 2030.
Combined, the projected shortfalls amount to nearly XCG 493 million over five years if no additional financing measures are introduced.
The figure does not mean Curaçao will suddenly face a bill of almost half a billion guilders in 2030. Rather, it represents the cumulative difference between projected AOV revenues and expenditures over the five-year period if developments follow the assumptions used in the calculations and nothing additional is done to close the gap.
Higher AOV Adds Around XCG 50 Million Annually
A significant part of the increased expenditure is related to the government's decision to raise the full AOV pension from XCG 862 to XCG 1,000 per month.
According to government calculations, the increase alone will require approximately XCG 48 million in additional funding in 2026. The annual additional cost is expected to gradually rise to more than XCG 51 million by 2030.
The SER supports the increase because it provides pensioners with additional income. However, the council stresses that a permanent increase in expenditure requires a permanent source of financing.
It is precisely that long-term financing that remains insufficiently clear, according to the advisory body.
Uncertainty Surrounding Schommelfonds
One possible source for covering deficits is the Schommelfonds, a financial buffer designed to absorb shortfalls among various social insurance funds.
However, there is uncertainty over how much financial capacity the Schommelfonds will have in the coming years.
The Ministry of Finance and the Central Bank of Curaçao and Sint Maarten (CBCS) use different assumptions in their calculations. The resulting projections differ to such an extent that, depending on which calculation is used, the fund could reach the point where available resources become insufficient sometime between 2027 and 2029.
The SER says this makes it impossible at present to reliably determine when the Schommelfonds could encounter financial difficulties.
The council wants the different calculations compared and the discrepancies explained before firm conclusions are drawn.
Another complication is that the Schommelfonds is not reserved exclusively for the AOV. Other social insurance funds can also rely on the same financial buffer.
The government can supplement the fund with money from the national budget, but the SER cautions against assuming that projected budget surpluses automatically provide a structural solution.
A surplus expected in future budgets does not necessarily mean sufficient funding will remain available every year to cover a permanently higher AOV.
The SER's warning therefore goes beyond the immediate cost of raising the pension to XCG 1,000. The central issue is whether Curaçao can sustainably finance the AOV as annual deficits increase and pressure on the social insurance system continues.