Retirement age Curacao increases to 65 in 2018

The newspaper Today reported yesterday that Curacao will increase retirement age from 60 to 65 years a bit more than five years from now, in 2018. This is one of the proposals in a leaked plan of the government to get a grip on its personnel costs. The plan also mentions the abolition of the regulation for early retirement and a temporary limit on vacation allowance and indexing of salaries.

The package of sixteen measures is not official yet and it has not been discussed between the government and the unions for civil servants. Minister Etienne van der Horst (Administration, Planning and services) and Abvo-union chairman Wendy Calmes did not want to react to the plans yesterday. Van der Horst said he is disappointed that the plans have been published in several newspapers and emphasized that neither he nor his ministry is behind it.

Calmes also indicated that he learned about the plans via the media and that the unions want to hear at the negotiating table from the government what her plans are. “Our position remains the same. We stick to our social statute. That is the guarantee from the government to its employees that it will not intervene in the labor conditions until 2015. That is the line we will stick to in talks with the government.”

The plans, the measures are recorded in a memorandum entitled elaboration on scenario labor conditions. The memorandum speaks of sixteen measures. Nine of them aim to increase government revenue and seven are so-called compensation measures. A central point in the memorandum is the increase of the retirement age for all civil servants from 60 to 65 years of age.

At the moment, civil servants retire at age 60, but they only qualify for the full payment of the old-age pension when they are 65. According to the plan that is now on the table all civil servants will retire from 2018 once they reach the age of 65. The plans include the abolition of the early retirement plan VUT per January 1 of next year. This measure will save the government a significant amount of money. In 2014, the savings amount to 5.2 million guilders and by 2017, the savings will increase to 13 million.

The government furthermore plans to decrease the number of civil servants in five years by 418. This will be done through a vacancy-stop and attrition. The plans also mention tailor-made gradual dismissal in addition to attrition.

Already this year the government expects to save 9.5 million guilders in personnel costs. Tailor-made gradual dismissal requires on the other hand in 2014 and 2015 an investment of 5.1 million guilders.

As a temporary measure, the government proposes to cut the vacation allowance for 2014 and 2015 from 6 to 3 percent, and to bring it back to 6 percent in 2016. This will save over two years 18.3 million guilders. The consumer price index for this year stands at 1.9 percent, but according to the government’s plans, the index will be put at zero for the next two years and return to 1.9 percent in 2016. The plans do not offer compensation for the years when the index will not be applied to the salaries. In 2014, this results in 4.7 million in savings and in the years after that it increases to 9.5 million a year.

The measures also target the steps in the salary-scales – the recurrent increases civil servants qualify for after a positive assessment. At the moment the number of steps per salary-scale is between 8 and 10; the plans speak of 16 to 20 steps. Doubling the steps in the salary-scales will yield 2 million guilders in savings in 2014 and afterwards increase by 2 million a year.

The general Pension Fund Curacao has also presented a proposal that must result in sustainable civil servants-pensions. The proposal speaks of a decrease in the pension premium for the employer by 3 percent and for the employee by 1 percent. The government will then spend 6 million guilders less on these premiums.

The proposals for vacation allowance, indexing, steps in the salary scales and pension premium measures also apply to teachers that work for private and denominational school boards. This will result in annual savings of between 5 and 7 million guilders.