Pension fund readies for major initiatives in 2017
PHILIPSBURG:--- APS, St. Maarten’s general pension fund, looks back at 2016 as a year of major achievements, as it envisions several important initiatives in 2017. So says APS chairman of the board, Franklyn Richards, in reviewing the fund’s activities and operation over the course of the past 12 months.
Similarly to pension funds elsewhere, APS has had to address developments to safeguard securing future pension payments.
Throughout 2016, APS continued implementing phases of a carefully planned investment program, which is designed to safeguard the pension capital and generate a minimum rate of return on long term.
Richards notes that “2016 was a year in which, together with the Government of St. Maarten and union representatives, the fund explored the possibilities of pension reform”.
Regarding investments, he says that “APS embraced several new investment opportunities, amongst which, the Rainforest Adventures St. Maarten project, the acquisition of parcels of land next to the new government administration building and another parcel for an office park in the Philipsburg area”.
Additionally, APS officially started with the development of the Mary’s Fancy estate and Welgelegen housing projects, on two separate properties acquired in 2014 and 2015.
Inevitable reform
St. Maarten’s pension scheme has been under pressure for several years now, says Richards.
“We are facing a rapidly increasing life expectancy, dubbed as the financial crisis of this century -- as well as prolonged low-interest rates. Result has been that many pension funds are now in trouble. St. Maarten’s APS pension fund is no different, where, for instance, our coverage ratio, guaranteeing the future sustainability of the fund, is below 100 percent”, says Richards.
Taking that into consideration, APS continues seeking and identifying various approaches to secure a sustainable and affordable fund and ideally create the possibility of having a coverage ratio above 100 percent.
According to the APS board chairman, “reform is inevitable if we want to continue to offer pensions in the future, to St. Maarten employees of government and government-related organizations”.
Throughout 2016, APS has actively been engaged in ‘doing the right thing for the client’ when it comes to securing present and future pensions.
The fund has considered several aspects as departure points for reform. These include a financially sustainable funding ratio of and above 105 percent and a lower and cost covering premium of around 18 percent.
The pension reform measures specifically look at the average pay pension system, pension based on average salary throughout one’s career instead of just the last 2 salaries and increasing the retirement age to 65 years, with an option to retire at age 62.
Investment projects
With the acquisition of Mary’s Fancy estate, “APS has exercised its need to invest and at the same time contribute to cultural heritage preservation”, says APS chairman Franklyn Richards.
The first phase of the project entailed the restructuring the historic stone walls and the so-called Zaegersgut, creating a walkway alongside the stone wall, widening of the bridge and creating an exit road to the Gladiola road.
Phase 2 of the project is slated to start in the first quarter of 2017 and will focus on restoring the plantation house and the sugar mill.
With the Welgelegen housing project and other investments in the pipeline, “APS has responded to the urgent and ongoing need of affordable homes, among others, for young professionals”, says Richards.
About exploring the possibilities of establishing a mortgage bank, APS sees this as a realistic opportunity for its clients, who wish to purchase one of the affordable homes being constructed. “More importantly, this would be a way of investing in Sint Maarten and its people, over a long-term period”, says the APS board chairman.
APS is thus keenly interested in benefitting younger members of the fund, as they continue to contribute towards the fund and not have to wait until retirement age to see benefits.
Debt settlement
With respect to the payment of the debt owed by the government of St. Maarten to APS, for an amount of over 83 million guilders, 2016 did see significant developments pertaining to the debt settlement agreement between both parties.
The sale of a parcel of land, next to the new government administration building, for building parking facilities, is part of the agreement reached to reduce the total amount of monies owed to APS. With a value of just under 4.5 million guilders, the transfer of the parcel has been reduced to about 79 million guilders. This remaining amount will be settled with funds coming from the settlement of the division of assets of the former Netherlands Antilles and from the sale of the new government building to SZV, notes the APS chairman of the board.
2017 initiatives
APS looks towards 2017 with enthusiasm and with great confidence, says Richards. Among the initiatives envisioned is the signing of a covenant on pension reforms between the government of St. Maarten, trade unions and the pension fund, APS.
Another agreement to be signed is the actual financing of pension reforms. That agreement would be signed between the government and APS.
With these and other initiatives expected for 2017, APS looks forward to an adaptation of legislation regarding the Pension Fund Ordinance St. Maarten, says the APS chairman of the board.
Looking back at 2016, Richards says that the APS organization “is grateful to those parties that worked with us in 2016, in our investments and projects, as we look forward to continuing successful working relationships in the coming year”.
He adds that “what we achieved in 2016 is also the result of many persons and organizations working together, in unison, to contribute to the pension fund – so that goals and milestones could be reached. I wish to express heartfelt gratitude to fellow members of the board, the management team, members of the investment and audit committees as well as the diligent APS staff through whom the pension fund will continue its service to its participants in 2017”.
