APS Pension Fund in Focus: A closer look at their 2022 performance

Sint Maarten, September 27, 2023 — The General Audit Chamber has released its report on the 2022 General Pension Fund (APS) financial statements.

In 2022, APS experienced a decline in its coverage ratio. The coverage ratio was 104.1% at the end of 2021 but decreased to 98.8% in 2022. The main reason for the drop is the unfavorable outcomes of the Fund’s international investments. APS raised the actuarial interest rate from 3.25% to 3.5%, which positively impacted the coverage ratio.

The coverage ratio indicates the percentage of pension liabilities that can be covered by the available assets. A ratio below 100% suggests that the assets are inadequate to meet pension obligations and fall short of covering general and investment risks.

APS's coverage ratio falling below a minimum of 100% by the end of 2022 is a concern. As required by law, when the coverage ratio is below 100%, APS must formulate a recovery plan. The General Audit Chamber recommends strict implementation and close monitoring of the recovery plan to restore the minimum funding ratio of 100% and achieve the target coverage ratio of 105%. This includes implementing the recovery plan’s recommendations and strategies and regular reporting on progress to relevant government agencies and stakeholders.

APS has been unable to provide indexation since the introduction of the pension reforms as allowed by law. Moreover, based on the fund’s performance, the pension accrual rate was already reduced from 2% to 1.75% as of January 1, 2021.

The General Audit Chamber recommends a closer examination of the local real estate projects currently facing issues and delays. The report recommends verifying whether these projects are still viable and financially sound. The General Audit Chamber will continue to monitor APS's progress in securing the Fund's sustainability.

The report is published in both English and Dutch and is available on the website of the General Audit Chamber (www.arsxm.org).