Fund meeting international financial challenges
St. Maarten’s general pension fund administrator, APS, now finds itself at an important juncture of its 5-year existence and plans to forge ahead with a reorganizational phase.
The reorganization is linked to the fund’s sustainability goals and is in keeping with trends worldwide, whereby pension funds are facing major challenges. These include the increase in the average life expectancy, meaning that pensions must be paid out for a longer period of time.
Another issue is that of the interest rate, where exceptionally low levels are allowing pension funds to hold more capital now and in the future with their obligations. Whereas international financial markets remain extremely volatile, this is a reflection of what is faced by governments and pension providers across the world, who are now engaged in major reforms to ensure that their pension systems are sustainable and affordable. This also applies to APS, which has decided to restructure its internal organization in order to meet these challenges head on.
Most important to APS is its unwavering goal of a sustainable and affordable pension scheme for former, current and future employees of the government of St. Maarten.
The reorganizational efforts come at a time when APS reports a somewhat improved financial position in 2013 with total assets of APS increasing from 457 million guilders in 2012 to 511 million guilders in 2013.
In addition, APS hopes to strengthen its financial position by increasing investment income.
APS reports that the return on assets was 6.34% in 2013. This was an increase compared with the yield of 5.49% achieved in 2012. The return achieved in 2013 was also better than the target of 5.50%.
This respectable investment result is mainly due to the international portfolio, which showed a return of 11%.
Domestic investments of APS consist primarily of fixed-income securities. The fund seeks to support opportunities and is therefore in discussion with various agencies to expand domestic investments with in real estate and private projects, so that APS is able to inject funds into the local economy. Projects must, however, meet the requirements for investment risk and return, which APS has outlined in its investment policy.
APS, meanwhile, continues to be in discussions with the government of Sint Maarten on repaying the sizable debt of the government owed to the pension fund.