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Social Economic Council submits advice on pension to St. Maarten government

MONDAY, 23 DECEMBER 2013

PHILIPSBURG–Social Economic Council SER has called for a mandatory pension for workers, who are currently without one with existing pension arrangements not being affected.

Both employees and employers should be obligated to contribute to the pension plan during the careers of workers. This was contained in an unsolicited advice entitled “A mandatory pension for St. Maarten – an attainable and robust pension for all employees in St. Maarten” submitted to Prime Minister Sarah Wescot-Williams last week.

Currently more than half of all employees do not have a pension in addition to AOV, SER said.

In its advice, SER says the minimum contribution of both parties together should be six per cent of the wage sum, but both should be 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 should be recorded in a pension agreement with an insurer or pension fund. Employees should have a say in the choice of the insurer and the pension agreement.

Essential to SER’s advice is that the new pension plan should travel with the employee from job-to-job, eliminating most pension-transfer problems.

The SER further advised that the cost insurers charge to execute new pension agreements be regulated by decree. This is to protect employer and employee from high overhead cost due to insufficient competition in the insurance market. Insurance companies can compete with the rate of return they offer in pension agreements, it was stated in a press release issued over the weekend.

SER advised that the existing tax deductibility for contributions to private pensions (annuities not related to employment) be increased from NAf. 1,000 to NAf. 12,000 annually. This would mean that employees and independent contractors would be able to deduct private pension premiums in their tax return. This will provide another incentive for St. Maarteners to start planning for their financial future and not depend only on AOV, SER said.

SER advised that workers would need to save for their pensions. After the publication in National Gazette, the advice SER’s will be available for downloading at www.sersxm.org.

Wescot-Williams said the advice was well-received and that close attention will be paid to it in the coming months.

Source: The Daily Herald, St. Maarten

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