WILLEMSTAD - Minister of Finance Javier Silvania believes that parliament should move forward with the consideration and adoption of the National Ordinance on the standardization of top incomes.
If they do not, this will have consequences for retired and current civil servants and their full pension or salary will not be indexed for the time being.
The indexation of the pension entitlements and the pensions of the General Pension Fund Curaçao APC are regulated in Article 30 of the National Ordinance on Public Employees' Pensions. According to this article, the indexation of the APC's pension is linked to the indexation of civil servants' salaries and the APC's financial position.
Article 30 provides that, if and insofar as the salaries of public servants change as a result of the adjustment of those salaries to the increased cost of living, (temporary) pensions will also be increased accordingly. This increase takes place with effect from 1 January of the calendar year to which the adjustment relates.
The indexation of the pension of the APC linked to the indexation of the salaries of civil servants. In accordance with the agreements made in the Kingdom Council of Ministers (RMR), in anticipation of the entry into force of the National Ordinance for the Standardization of Top Incomes, the remuneration of employees in the public or semi-public sector has been cut by 12.5% since 2020. In order to achieve the reduction of 12.5%, the indexation of the salaries of employees in the (semi) public sector has been frozen.
In the Kingdom Council of Ministers of June 24, 2022, it was decided that Curaçao is allowed to phase out the above-mentioned reduction of 12.5% under certain conditions. One of the conditions is that phasing out can only take place after the National Ordinance for the Standardization of Top Incomes in accordance with RMR Decrees has been established in Curaçao and it will enter into force as soon as possible.
Because the freezing of indexation is part of the reduction of 12.5%, the National Ordinance for the Standardization of Top Incomes must come into effect so that the salaries of employees in the (semi) public sector can be indexed again. Only then can the pensions of the APC be indexed again, in accordance with Article 30 of the Public Service Pension Ordinance.
So we have to wait for parliament, says Silvania.
Incidentally, all this also depends on the power of the APC whether an increase is possible. The board of the APC can choose to omit the increase in whole or in part. The basic principle is that the funding ratio, after indexation, is not lower than 105% for partial indexation, and not less than 115% for full indexation. With a funding ratio of more than 105% to 115%, partial indexation can be considered. With a funding ratio higher than 115%, an indexation of 100% can be considered.