WILLEMSTAD – Curaçao should not rely on a single source of revenue to finance its higher AOV pension and instead needs a combination of structural measures to ensure the old-age pension remains affordable over the next five, 10 and 20 years, according to the Social Economic Council (SER).
The SER supports maintaining the full AOV at XCG 1,000 per month but says the government has yet to provide a convincing long-term answer to how the higher benefit will be financed.
Calculations from the Social Insurance Bank (SVB) indicate that the AOV system could accumulate a financing deficit of almost XCG 493 million between 2026 and 2030 without additional measures.
The annual shortfall is projected to increase from more than XCG 68 million in 2026 to almost XCG 129 million by 2030.
Against that background, the SER is calling for a combination of measures rather than depending heavily on one source of revenue.
Among the options identified by the council are improving the collection of taxes and social insurance premiums and reducing informal employment so that more workers and employers contribute to the social insurance system.
The SER also wants the government to establish a predictable annual contribution from the national budget.
At the same time, the council warns against making AOV financing excessively dependent on one sector, particularly tourism. Revenue connected to tourism can fluctuate when visitor numbers or economic conditions deteriorate, while AOV payments remain a continuing obligation.
More Controversial Measures Remain on the Table
Other possible measures include increasing social insurance premiums, raising taxes or making further changes to the retirement age.
The SER does not take a position on those options in its current advice because, according to the council, they have not yet been sufficiently investigated.
The immediate concern is to develop a financing structure capable of withstanding both expected costs and economic setbacks.
The Schommelfonds could help absorb deficits, but the SER does not consider it an automatic solution.
Different projections from the Ministry of Finance and the Central Bank of Curaçao and Sint Maarten indicate that the financial room available in the fund could become insufficient sometime between 2027 and 2029. The SER wants those conflicting projections reconciled.
In addition, the Schommelfonds serves several social insurance programs and is not exclusively available for the AOV.
The government could use future budget surpluses to strengthen the fund, but the SER warns that projected surpluses should not automatically be regarded as permanent fiscal space.
The council therefore wants the government to prepare a long-term financial plan that also calculates what would happen under less favorable economic scenarios.
The SER's position is that the XCG 1,000 AOV can remain in place. The unresolved question is whether Curaçao can guarantee sufficient structural revenue to continue paying that amount — and potentially higher amounts in the future — without creating increasingly large deficits in the social insurance system.