Irma had ‘minimal’ effect on APS, but fund battling other ‘storms’ | THE DAILY HERALD

PHILIPSBURG–While hurricane Irma had “minimal effect” on the general pension fund APS, the fund has some “storms,” that it has to weather, Managing Director Nadya Croes-van Putten told Members of Parliament (MPs) during a meeting of Parliament’s Finance Committee on Tuesday.

Croes-van Putten said APS was spared Irma’s wrath and its finances, real estate and main investment projects were not affected. She credited this to the rallying of the international markets coupled with the upswing in the construction sector, amongst other things. She said while APS does not see any effects of Irma in terms of its coverage ratio, the fund does have some storms to weather.

The “storms” APS is trying to weather include the approximately NAf. 39 million that government owes the organization. Croes-van Putten said as government owes this amount, it means that it cannot be invested to increase the Fund’s coverage ratio.

A second storm is the finalization of the division of assets (in Dutch: boedelscheiding) with the APC pension fund in Curaçao. She said while “the big bulk” was finalized, this matter has been dragging on for quite a while. She had asked the finance minister to discuss the matter and she understood that it will be finalised as soon as possible. She said while this subject might not be a priority for a large pension fund such as APC, it is a big priority for APS and the local pension fund would like to have this amount on its books.

The third storm is the need for the pension system reform to be finalised for the “future-readiness” of the APS Fund. Since APS participants are living longer more funds are needed for a longer period as age levels increase. “Therefore, more instruments are needed to influence the coverage ratio positively.”

She said also that while enough money is available, there are not enough projects to invest in. “And if you do find projects they are either too big or too risky for one investor alone.”

This has resulted in St. Maarten being dependent on foreign debt. “Big projects are often funded by overseas investors as they can do it quicker, all at once and sometimes alone. Foreign investors are in the lead when it comes to St. Maarten’s economy. Foreign investors are focused on earning their money back fast and often at a high interest rate (little long-term commitment).”

Croes-van Putten spoke about some of APS’ investments. By developing these properties, APS’ capital will appreciate over time, while generating an acceptable return on these investments in the interest of a positive development of the coverage ratio and the St. Maarten economy. APS’ main development projects are Mary’s Fancy Plantation Hotel, Oryx Residences, some financed large projects such as St. Maarten Medical Center (SMMC) and other own projects in the pipeline.

In the meantime, APS has approximately 4,400 participants and about 930 pensioners. Its total pension assets were NAf. 692 million as per June 2018. Its local portfolio (everything invested in St. Maarten and Curaçao) was NAf. 369 million as per June 2018. Its international portfolio was NAf. 248 million as per June 2018. APS’ return on investments stands at 6.97% as of December 2017. This is above the 5.5% minimum APS target.

In introductory remarks during the meeting Finance Minister Perry Geerlings indicated it has been estimated that Irma caused more than US $1.8 to 2 billion dollars in economic damage in St. Maarten. Consequently, even with a Trust Fund sponsored by the Netherlands, in the amount of 550 million euros to finance the National Recovery and Resilience Plan, as well as the damage pay-outs by insurance companies and investments made by citizens and local corporations, St. Maarten still has an enormous financial shortfall of several hundred million dollars for the reconstruction of the Sint Maarten’s economy and infrastructure over the next few years.

“Given the fragile situation of St. Maarten’s economy, we must applaud those investors that believe in St. Maarten and the resilience of our economy, especially the local institutions…”

“By putting its shoulders under the reconstruction of the economy of St. Maarten, through a speedier process for third-party project approval and the shortening of the duration of projects it undertakes, and because of its capital base, APS can play an essential role in stimulating the economy of St. Maarten.”

The minister said not only will there be an acceleration of project implementation, but this would also have a positive effect on various economic sectors and the labour market in the country in the post-Irma period. These measures will, in turn, be favourable for the future financial position of the Government, because of the collection of wage and profit taxes connected to the increased economic activities. As a result, the Government’s deficit, which grew post-Irma, will decrease over time.

Several MPs posed questions during the meeting and these will be answered when the meeting, which was adjourned, resumes.

Source: The Daily Herald