Retiring In Curaçao – Old Age Provisions In Curaçao And Pension Savings

Thinking about retiring in Curaçao? Want to know more about old-age provisions in Curaçao and about rules on pension savings in Curaçao?

For all those who think about spending their old days in 'Dushi Korsou', I wrote this blog about the old-day provisions on our island. In this blog, I will give information about building a pension in Curaçao. This is also known as retirement savings. The Parliament of Curaçao recently amended some laws to make private savings for your retirement very attractive in Curaçao.

Here you determine how much money you want to save for your retirement in a blocked bank account. You are thus building up your individual old-age provision. This form of savings has gained popularity in recent years.

Forms of old-fashioned provisions in Curaçao

There are three forms of old-age provisions in Curaçao:

• The General Old Age Provision (AOV) or the government pension.
• A pension based on a company pension fund or a general insurance company.
• Private savings for your old day - a private old day savings provision.

The AOV is increasingly under pressure and participation in a company pension fund is not for everyone. That's why it's a good idea to have private savings for your old-age years in Curaçao. This is also called pension savings.

Save for your retirement in Curaçao - what are the rules?

In case of retirement savings, you will deposit money in a blocked bank account. Money from this blocked account can only be withdrawn if:

• The account holder has reached at least the age of 60 years.
• Within 6 months of the death of the spouse/partner of the saver.
• In above cases, the money may not be withdrawn in full at one time. This must be paid over a period of at least 5 years.

What happens with accrued retirement on a blocked account in Curaçao when the saver dies? The money may then be paid to the survivor (s). Even then, the money cannot be paid in full at one time.

• For a spouse/partner, it must be paid over a period of at least 5 years.
• In the case of children under the age of 27, it must be paid over the number of years the child is younger than 27 years. This with a minimum of 5 years. For a child of 15 years, this means, for example, a term of (27 minus 15) 12 years.
• In children over 27 years or parents of the saver, the minimum period is 20 years.

There is an exception to the above rules: if the savings per year do not exceed NAf. 1,000.00 deposited in the blocked account. In this case, the amount may be taken in full in all of the above cases.

Tax benefits pension savings on Curaçao

As of January 1, 2016, all deposits made on a blocked bank account to save for your old day on Curaçao may be deducted from your income for your income tax return.

Also, the maximum deduction has been increased. The maximum deduction in 2016 was still NAf. 1,500.00 per person, in 2017 this has been increased to NAf. 3.000,00. The Parliament of Curaçao also stated that the deduction will be NAf. 5.000,00 per person starting in 2019. With these adapted laws, it is extra advantageous to save for your retirement in Curaçao.

People who are married are entitled to NAf 10,000.00 deduction together.

Save for your own retirement on Curaçao versus life insurance/annuity:

Finally, some benefits from pension savings to life insurance:

• You do not have to pay a fixed amount. You can decide on the amount of money you want to pay each year.
• Unlike life annuities/life insurance, you do not have to pay a premium for the risk of death in the initial phase.
• When the saver dies, the funds will remain available to heirs. In the case of life insurances, the accumulated funds will go to the insurance company upon the death of the saver.

Want to know more about this topic? Send me a message and I'll be happy to help!

Would you like to know more about the current housing market on Curaçao after reading this blog? Click here for an overview of houses in Curaçao and rental houses on Curaçao.

By Margriet

Thanks to Price Waterhouse Coopers Dutch Caribbean