Curaçao’s pension system is coming under increasing pressure as demographic trends accelerate the imbalance between workers and retirees, according to a new analysis by the Central Bank of Curaçao and Sint Maarten .
Nearly one quarter of Curaçao’s population is now aged 65 or older, a sharp increase compared to just over a decade ago. At the same time, the island has one of the lowest fertility rates in the region, with an average of 1.4 children per woman. This combination is rapidly shrinking the pool of working-age contributors who finance the AOV system.
Because the AOV operates as a pay-as-you-go scheme, current workers fund current retirees. As the number of pensioners rises and the number of contributors falls, the financial balance of the system becomes increasingly fragile. The Central Bank notes that more than 40 percent of elderly residents who have never lived abroad rely on the AOV as their sole source of income.
