KRALENDIJK- Pensioenfonds Caribisch Nederland (PCN) will index the pensions by 4% as of January 1, 2022. This is entirely in line with the average price inflation of Saba, Bonaire and St. Eustatius. The board took this decision in the board meeting of November. The Supervisory Board has agreed, and the Advice and Accountability
Board has given a positive opinion. In 2022 the contribution will remain equal to the level of the past years and will amount to 22% of the pensionable salary.
We are able to fully index thanks to the good financial position of the fund. The explanation is twofold. Firstly, the increase of the discount rate, by which the pension commitments are valued, plays an important role. It is caused by the increase of the market interest rate. Besides that, PCN realized a positive investment result in 2021 (up to and including October 2021 this amounted to 2.8%). A remarkable detail is that the local investments generated a somewhat better return than our international investments.
The funding ratio of PCN amounted to 118.7% in October of this year. This time last year the funding ratio was only 96.8%. In conformity with the requirements of the Financial Supervisory Framework BES, PCN must have a funding ratio of 115.1% in order to have sufficient buffer and space to fully index. Based on the current funding ratio, PCN amply fulfils this requirement, and all pensions and entitlements can be increased by 4%. Due to these developments, PCN has recovered from short-term underfunding as well. And that is good news, according to the chairman of the board Harald Linkels: “The last period has been turbulent due to COVID-19 and all the changes with regard to pensions. It is important for our participants that we, as a pension fund, have held up well and that we are even ahead of the long-term recovery plan.”
To finish the long-term recovery plan, the funding ratio must exceed the 115.1% for three successive quarters. The first quarter has now been achieved. But the decision to index causes the funding ratio to somewhat drop below this required minimum. The board accepts that due to this decision it will take a little longer to fully recover.
Last year, the pensions were not indexed due to a negative inflation. In 2020 the indexation was 0.75% and in 2019 it was 2%.