At Status Aparte, GOA inherited Awg 60M in premiums paid by Aruban employees. That money was designed to start the new Aruban SVB. But the money was never transferred to SVB’s coffers, it remained on the books as a debt, by GOA to SVB.
In 2014, our financial supervision, Cft, determined that SVB’s resources would run out by 2015 and that a bridge loan of Awg 3.4M would be needed to make ends meet. RvA, our Advisor Board also pointed this out in 2014, and SVB supported the claim that it is on the brink of collapse. Even ILO agreed. AVP brazenly decided in 2015 to post the Awg 60M as a “donation” on its books in order to meet budget norm. SVB, and the pensioners, are still waiting for that to be reversed.
The civil servants’ pension fund, APFA, also faced major challenges for years. These were mainly the result of an old and luxurious pension scheme from 1936. This pension was based on the salary of the last two years of service and could already be enjoyed from age 55.
Politicians took advantage of this extensively, when they strongly promoted party loyalists during their last two years of service, paying disproportionally small premiums for BIG retirement plans, and becoming a major burden on the fund.
Moreover, the AVP government did not even pay any premiums for years, so that Country Aruba eventually ran into millions of euros in deficits.
In 2001, this problem was “solved” by introducing a new strategy, which turned the debt to APFA into a receivable, in one shot – Armand calls it Ticonomics, after the then ingenious minister. Here too, hundreds of millions of florins of pensioners went up in smoke. As a result, the government’s sizeable budget deficit suddenly showed a surplus.
In 2014, the APFA’s coverage ratio was only 80%. The government had a legal obligation to make up the deficit of about Awg 170M. GOA came under heavy pressure from the Netherlands, and took out a loan with APFA, in order “to meet that obligation.”
In 2011 the compulsory company pension was introduced under AVP. There was a great lack of clarity: What would the cost and the return be, during the investment period; how were the survivors’ pensions and disability pensions arranged; If at all and how, were policyholders given an explanation about their employer’s pension plan?
Since the government has so far failed to appoint a supervisor such as SVB, the expected abuse takes place regularly: Employees are not registered; Contributions are not paid and so they do not receive a pension later. Or contributions are withheld, but not paid in, etc. Ultimately, the pension is quite low. But for the government, this pension fund is an advantage as an ever-ready borrowing source.
In the 2017 elections, the two largest political parties once again tried to lure voters with absurd retirement promises. MEP advertised lowering of the retirement age to 62. AVP advised retirees that their pension would be further increased, that in addition to the repair allowance, there will also be a housing allowance of up to Awg 300, while the AZV premiums and other taxes would be reduced.
AVP’s shamelessness went so far as to claim that their action saved the AOV and APFA funds from bankruptcy. The party, of course, did not add that this near-collapse was the result of its own actions. The supervisory Board, RvA, responded with a clear warning that these types of schemes would lead to an accelerated rate of pension fund depletion.
Conclusion
If we look at all these consecutive facts, it becomes clear that AVP’s “concern” and wish to monitor the pension fund are justified. As long as political parties such as AVP and MEP continue to interfere with the management of pensions, for electoral gains, pensioners should indeed be very concerned: party political ‘interference’ has already cost our pension funds, and thus the retirees, many hundreds of millions and therefore almost led to the bankruptcy of the AOV pension fund in particular. It is therefore important to remove pension policy AWAY from the party political sphere of influence.
From the AVP kitchen:
Armand Hessels forgets the 2011-14 reforms which were key to not having issues today with APFA or SVB.
The reforms included the supervision of APFA by the Central Bank; Retirement age of civil servants raised from 55 to 65, gradually, over 10 years; Austerization of pension benefits of politicians, and more. The one time transfer in 2014, was very helpful, and as a result you may read in yesterday S&P report that APFA is still solid!
