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Sint Maarten

February 5, 2014

Social Economic Council

SER submits advice on pension to government

SER submits advice on pension to government

Photo: www.sersxm.org

PHILIPSBURG - The Social Economic Council (SER) submitted an unsolicited advice entitled "A mandatory pension for Sint Maarten - an attainable and robust pension for all employees in Sint Maarten" to Prime Minister Wescot-Williams last week. Currently more than half of all employees do not have a 
pension additional to AOV. The advice proposes a mandatory pension for all employees currently 
without a pension with existing pension arrangements not being affected.
 
The advice entails that both employees and employers are obligated to contribute to the pension plan 
during the careers of workers. The minimum contribution of both parties together is 6 of the wage 
sum but both are free to contribute more, provided that employers contribute at least half in all cases. 
Employees and employers can deduct their premiums from wage- and profit tax. These contributions 
are recorded in a pension agreement with an insurer or pension fund. Employees have a say in the 
choice of the insurer and the pension agreement. Essential to the SER advice is that the new pension 
plan travels with the employee from job to job, eliminating most pension transfer problems.
 
The SER further advises that all the costs insurers can charge to execute new pension agreements are 
regulated by decree. This is to protect employer and employee from high overhead costs due to 
insufficient competition in the insurance market. Insurance companies can compete with the rate of 
return they offer in pension agreements. Moreover, the SER advises to increase the existing tax deductibility for contributions to private pensions 
(annuities not related to employment) from 1,000 to 12,000 ANG yearly. Therefore, employees, but also 
independent contractors, can deduct private pension premiums in their tax return. This provides 
another incentive for Sint Maarteners to start planning for their financial future and not depend only on 
AOV. The SER stipulates that workers will need to save for their pensions; it is not given to them. After 
the publication in the National Gazette the advice of the SER will be available for downloading at 
www.sersxm.org. The Prime Minister had stated that the advice was well received and that close attention will be paid to it in the coming months. 

Source: www.sersxm.org