1. THE FUTURE OF YOUR PENSIONS
APS INTO THE FUTURE
THE FUTURE OF YOUR PENSIONS
Oscar Williams – Manager Pension Department/Adjunct Director

2. TOPICS Premiums Pension, Provison and Coverage Ratio
Pending Pension Reform
Statistics database APS
Role of APS
TOPICS

3. ROLE OF APS PRIMARY FOCUS Tasks
APS core responsibility is to execute the Pensioenlandsverordening Overheidsdienaren (AB 2016, no.16).
Pay out of the related pension benefits
Manage risks /
good governance
Manage the pension
administration of
our participants
Invest collected
premiums and
returns
Tasks

4. ROLE OF APS ADVISORY ROLE
Along with the execution of the law, APS also advises on issues that concern the law or have an effect on the pension fund as a whole.
Based on the above, APS can also be considered as a “gesprekspartner” for other entities. Hereby sharing experiences with other stakeholders.
The task of changing the “Pensioenlandsverordening”
lies with the Government of St. Maarten.

5. In total there are 20 employers affiliated with APS.
COMPOSITION
In total there are 20 employers affiliated with APS.
The Government of St. Maarten (including de Staten, Raden, ARK etc.) has the most with 1910 participants (70% of the active population).
The Foundation Catholic Education St. Maarten has the second biggest amount with 239 participants (9% of the active population).

6. EMPLOYEE DATABASE COMPOSITION
Year
2014
2015
2016
2017
2018* (estimate)
Actives
2655
2617
2590
2601
2684
Pensioners
780
850
908
961
941
Other beneficiaries
169
167
175
178
181
Participants with deferred rights
434
525
602
681
764
Total population
4038
4159
4275
4421
4570

7. CURRENT PENSION SCHEME
Final salary serves as starting point for the pension accrual
Each year, the accrued pension is adapted to the most recent pension base as if this applied throughout the entire service career
The costs of the system are high which makes it unsustainable
In fact, there is automatic indexation until the retirement date

8. CALCULATION METHODS x x Pension base (salary-franchise)
Accrual percentage
Service years
Part-time percentage
1. Pension (accrued) = x x x
2. Pension Obligation Benefit =
Pension (accrued)
Factor (based on the
mortality tables) x
3. Coverage ratio =
Total assets
Pension Obligation Benefit /

9. PENSION BENEFIT OBLIGATION &
COVERAGE RATIO
2017
2020*
2023*
A. Fund Assets (x 1 milj.)
674
754
843
B. Pension Benefit
Obligation (x 1 milj.)
654
878
Coverage ratio (=A/B)
103%
100%
96%
(*estimate)

10. THE CHALLENGE FOR APS
Premiums
Pension
benefits
Investment return

11. PREMIUMS
Based on the current “Pensioenlandsverordening” the premium is set at 25% of the gross salary of the participant.
The so called cost-effective premium consists of the costs that are needed for the active participants that should be covered by the actual received premiums (25%). The cost-effective premium is intended for the accrual of pension for the active participants.
The premium should cover the following components :
The yearly accrual of pension (coming service).
The back service costs of the pension.
The costs affiliated with the passing of a participant in active service. (financing of the widow(ers) pension.
The costs affiliated with an active getting disabled and not fit to work. (financing of the disability pension while the income of premium stops.
The costs for executing the pension scheme.

12. The costs for the solvency of the fund.
In addition, for the premium to contribute to the funds (solvency) and recovery to a coverage ratio of 115% it should cover the following:
The costs for the solvency of the fund.
Over the last 7 years the premium of 25% has not been cost-effective.
2010
2011
2012
2013
2014
2015
2016
2017
Premium cost-effective
>25%
<25%
In the actuarial year report of 2017 the premium was barely covering the necessary costs but not enough to contribute to the solvency of the fund.
This is expected to continue if the scheme doesn’t change.

13. PENDING PENSION REFORM
Why Reform ?
To ensure the quality of the pension for participants now and in the future
To create a more affordable pension scheme for all stakeholders
To improve the sustainability of the fund for the future
Pension Benefit Obligation is increasing:
Number of participants is increasing.
Persons are living longer. Persons will receive pension benefits over a longer period. This is the trend on the surrounding islands and the rest of the world.
Pension assets (capital) is limited:
Premiums paid are not cost effective: insufficient to cover costs of the pension plan (underfunding)
Large outstanding debt  not all funds available for investing
Fluctuating investment returns
Limited investment opportunities

14. PENDING PENSION REFORM
- PROPOSED CHANGES -
Average pay system:
Salary of each year serves as starting point for the pension accrual
The accrued pension is the sum of the annual accrual
The pension is possibly increased with indexation

15. PENDING PENSION REFORM
Retirement age: 65 years with option to retire from 62 years. 01
Participation: from 18 years – decreased from 25 years.
Indexation of pension depending on the coverage ratio of the fund. 08 02 07 03
No further accrual of Duurtetoeslag (DT). Accrued DT remains until pensionable age.
Accrued pension benefits  one time increase of 10% at implementation of reform.
PENDING PENSION REFORM
- PROPOSED CHANGES - 06 04
Participants can make additional deposits. 05
The premium: 18% of the gross salary. By maximum accrued pension  premium no longer mandatory.
The accrual of pension remains 2%. It can be lowered to 1,75% if the 18% premium is not cost-effective.

16. PENSION BENEFIT OBLIGATION & COVERAGE RATIO (AFTER REFORM)
2017
2020*
2023*
A. Fund Assets (x 1 milj.)
674
720
843
B. Pension Benefit
Obligation (x 1 milj.)
654
673
779
Coverage ratio (=A/B)
103%
107%
(*estimate)

17. INVESTING TOGETHER IN OUR FUTURE
Thank you!