Published On: Fri, Sep 19th, 2014

Curacao mulls mandatory company pension for all employees

Introduction

WillemstadOn July 29, 2014, independent Member of Parliament, Mrs. Leeflang, presented draft legislation which provides for a mandatory company pension for all employees in Curaçao (in Dutch “Landsverordening Verplicht aanvullend minimum Bedrijfspensioen”). The reason for presenting this draft legislation is that more than 50% of the employees in Curaçao do not have access to a pension scheme. Upon retirement, those employees will only receive a General Old Age Pension. This pension is currently maximized on ANG 862 per month. This income is considered below the minimum standard of living. The draft legislation provides for a mandatory company pension to employees in the private sector and in combination with the General Old Age Pension (in Dutch “Algemene Ouderdomsverzekering”) would give the retiree an income of at least the level of the minimum standard of living. In this memo we discuss the outline of the draft legislation.

Mandatory Company Pension

The draft legislation makes it obligatory for every employer with an annual turnover of at least ANG 30,000, to conclude a pension insurance for his employees. The minimum annual premium will amount to 4%, of which at least 50% (thus at least 2%) will be for the account of the employer. This minimum premium is calculated on the basis of the total wages according to the summary wage statement (in Dutch “Verzamelloonstaat”).

As insurer for the pension insurance may act:

a) a company pension fund as meant in the Ordinance Company Pension Funds (in Dutch “Landsverordening ondernemingspensioenfondsen”);

b) a Life Insurance Company as meant in the Ordinance Supervision Insurance Companies (in Dutch “Landsverordening Toezicht Verzekeringsbedrijf”);

c) a non-domiciled professional insurer or pension fund that is indicated as insurer by the Inspector of Taxes;

d) another entity1 not mentioned under a, b or c, that is domiciled in Curaçao and whereby the provision for pension is accounted for as local equity; or

e) the natural person that employs one or more employees.

For insurers mentioned under d and e certain conditions apply.
The employer has to send an authenticated copy of the pension scheme and the contract with the insurer to the Inspector of Taxes within two weeks of signing.

3. The date the legislation comes into force uncertain

Considering the fact that the draft legislation was presented to the Chairman of Parliament on July 29, 2014 and has to go through the legislative process, e.g. advice of the Council of Advice, advice of the Social Economic Board and plenary discussion in Parliament, it is uncertain whether the legislation will and on which date comes into force. Furthermore, during the legislative process, changes to the draft legislation may be adopted.

If you would like to receive a copy of the current draft legislation and the example pension plan “Bedrijfspensioenregeling” (in Dutch “Pensioenregelement Bedrijfspensioenregeling”) attached to the legislation, let us know.

Arthur van Aalst, Tax Attorney
Wilco van Oosten, Tax Advisor

Baker Tilly Dutch Caribbean, 2014

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