Curaçao and St. Maarten’s pension systems rests on very shaky ground

GREAT BAY--The promise of retirement security in Curaçao and St. Maarten rests on shaky ground. A new independent review commissioned by the Centrale Bank van Curaçao en Sint Maarten (CBCS) and conducted by Mercer Consulting has given the two countries’ pension systems a sobering grade: 5.8 out of 10, or a “C.” That score represents neither collapse nor stability, but a precarious middle, one that could leave workers, retirees, and policymakers facing uncomfortable questions about the future.

The review, released on August 29, 2025, highlights a reality that many citizens already feel: while the basic state pension remains a relative strength, cracks in coverage, funding, and governance are widening. Unless addressed, these weaknesses may erode confidence in the system and endanger the retirement security of generations to come.

Mercer’s assessment examined more than 50 indicators across three categories: adequacy, sustainability, and integrity. The results are mixed.

On the positive side, Curaçao and Sint Maarten’s basic state pensions scored well. In both countries, the state benefit accounts for a relatively high percentage of average wages, 41% in Curaçao and an even more robust 60% in Sint Maarten. Preservation requirements, which prevent workers from prematurely cashing out pension savings, also earned high marks.

But beneath these pillars of strength lie troubling gaps. The net pension replacement rate, which measures how well pensions replace pre-retirement income, scored a near-failing 1.0 out of 10. In practice, this means many retirees may struggle to maintain a reasonable standard of living, even when combining state and occupational pensions. Coverage rates are also dangerously low: just 32% of the working-age population participates in retirement savings plans, far short of the 80% threshold that signals resilience.

Compounding the problem, mandatory contributions to private pensions are nonexistent for most workers. While public-sector employees enjoy defined benefit schemes, private-sector participation is voluntary and inconsistent, leaving large parts of the workforce without sufficient retirement planning.

Equally concerning is the issue of integrity. Pension systems do not function on money alone; they depend on public trust. Here too the review identified weaknesses. Regulations and governance received only a middling score (5.7), while protection and communication with plan members fell to 4.6 out of 10. These shortcomings reveal a system that is not only underfunded but also poorly understood, with insufficient safeguards against mismanagement.

The CBCS has recognized these vulnerabilities. As the supervisory authority, it intends to embed stronger governance and disclosure requirements into its 2026–2028 strategic plan. Proposed measures include mandatory risk management policies, anti-corruption codes of conduct, clearer reporting on plan performance, and annual benefit statements for members. Such steps are essential to restore confidence, but they also require political will and timely legislative follow-through.

Behind these structural weaknesses lies an unavoidable demographic reality. Like much of the world, Curaçao and Sint Maarten face an aging population. As more citizens reach retirement age, the strain on pay-as-you-go state pensions grows heavier. Without broadening the base of contributors and improving funding, the imbalance between retirees and active workers will worsen, undermining the system’s sustainability.

In this context, Mercer’s recommendation for a compulsory second pillar, a mandatory private pension system, is crucial. Such a move would not only expand coverage but also improve contribution levels and replacement rates. Yet it will be politically sensitive. Employers may resist added costs, while workers already struggling with inflation and stagnant wages may balk at mandatory deductions. Still, the alternative is a system increasingly unable to deliver on its promises.

The review underscores that reform cannot be postponed. CBCS has laid out a phased plan: a feasibility study, regulatory adjustments, and submission of updated legislation. Each step will demand collaboration between governments, pension providers, and civil society. Success will hinge on whether stakeholders see pensions not as a distant problem but as an urgent priority shaping financial stability and social cohesion.

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