A compulsory pension scheme was mentioned by caretaker Minister of Public Health, Social Affairs and Labour VSA Emil Lee as one of the Ministry’s priorities during the budget debate in Parliament (see Wednesday paper). Most people would agree that the general old age AOV pension alone is in reality not a liveable wage for the elderly.
Mandatory pension insurance in the private sector could indeed help compensate for the latter, with civil servants and teachers already covered via the general pension fund APS. However, there are several aspects to consider.
For starters, premiums probably would have to be paid by both employers and personnel to make it feasible, which on the one hand translates to a higher cost of doing business and on the other hand less disposable income for workers. The latter reduces their purchasing power, with all possible consequences for the economy.
Still, the notion that persons having performed labour much of their lives should be able to enjoy a decent existence makes sense, so exploring options certainly wouldn’t hurt. It’s important as well that various reasonable alternatives are available depending on the nature and specific situation of each company or organisation.
One tip is to actively involve the existing insurance companies and not make this another bureaucratic monster. Government may legislate and regulate, but experience shows that implementing such matters is best left up to free enterprise.
A framework can be created within which the market forces are allowed to operate, to promote fair completion in terms of price and quality.
On the whole, care must be taken not to make St. Maarten too expensive, also in light of the same Ministry’s plans for a national health insurance. After all, Aruba’s version of such called AZV ran huge deficits of millions for years that had a negative impact on the country’s finances and contributed to its budget crisis, which in turn sparked an instruction from the Kingdom Council of Ministers.
In short: Proceed with caution.