WILLEMSTAD – Curaçao’s government is preparing a major overhaul of the island’s pension system, with a new AOV law expected to take effect on January 1, 2027, introducing a revised indexation model aimed at better protecting the purchasing power of pensioners while safeguarding the long-term financial stability of the fund.
The proposed reform centers on a new mechanism for adjusting the Algemene Ouderdomsverzekering (AOV), Curaçao’s state pension system, according to plans outlined by the government.
Ministers Charetti America of Social Development, Labor and Welfare and Charles Cooper of Finance confirmed that work is underway on amendments to the AOV legislation.
Under the new model, annual pension increases would no longer be automatic but linked to two key factors: inflation and real economic growth.
The revised formula would use changes in the consumer price index as a base measure, while also taking into account whether the economy is growing strongly enough to support higher pension payments.
According to the government’s proposal, AOV benefits would only increase if Curaçao’s economy records an average growth rate of at least 2 percent.
Officials say this condition is intended to prevent pension increases during periods when the economy lacks sufficient financial capacity.
The government will reportedly assess multiple years of economic data before deciding on annual adjustments.
The reform is designed to strike a balance between social protection for retirees and financial sustainability of the pension fund.
Government officials have stressed that major immediate increases in AOV payments are currently not financially feasible, warning that such measures could place additional strain on the pension system.
The draft legislation is expected to be submitted to the Council of Ministers later this year before being sent to the Curaçao Parliament for debate and approval.
The issue of AOV indexation has become increasingly sensitive in Curaçao, particularly as rising living costs continue to affect elderly residents living on fixed incomes.
The proposed law is likely to face close scrutiny in Parliament, especially as opposition parties and senior citizen groups continue pressing for stronger protections for retirees’ purchasing power.