The reliability of the 2013 Financial Statement of the General Pension Fund of Sint Maartenarsxm
Philipsburg – The General Audit Chamber issued a report regarding the reliability of the 2013 Financial Statement of the General Pension Fund of Sint Maarten. The report containing the findings, conclusions and recommendations regarding the 2013 Financial Statement of the General Pension Fund was presented to Parliament and the Minister of Finance on Tuesday, November 24th, 2015.
According to the General Audit Chamber, because of a number of uncertainties in the financial statement, they cannot conclude that the financial position of the General Pension Fund, as of December 31st, 2013, was indeed healthy.
The Audit Chamber reports that the General Pension Fund has been dealing with lingering issues since its establishment in 2010. Many of these issues remain unresolved. For example: the claim against Government is significant (in 2013: ANG 68 million) and continues to increase, despite the fact that negotiations to settle the debt have been ongoing for years.
The Audit Chamber believes that the settling the claim, in the near term, is important to avoid possible future financial disadvantages to participants.
Because the General Pension Fund invoiced Government using a premium percentage of 22%, even though the National Ordinance on Pensions requires a premium percentage rate of 25%, the Fund failed to collect ANG 12.8 million. This amount could therefore not be invested. The Pension Fund intends to invoice for the difference starting in 2016. The claim against Government will increase by several millions.
Another area of concern reported by the Audit Chamber is the unsatisfactory coverage ratio of the Fund. The coverage ratio is calculated by subtracting short-term and long-term debt from the total balance sheet assets, and dividing the result by the total pension obligation determine the coverage ratio. The General Pension Fund maintains an internal standard of at least 105%. At the end of 2013, the coverage ratio of the General Pension Fund was 101.4% (in 2012 it was 100.4%). At that level, the General Pension Fund fails to meet its own standard of coverage. The Audit Chamber feels that a structural and realistic plan towards achieving a healthy coverage ratio of at least 105% is needed in the near term.
The Audit Chamber further stated that the General Pension Fund did not meet all legal requirements during the reporting 2013 period. As part of the audit, the Audit Chamber reviews issues related to legal compliance with the National Ordinance APS and other regulations related to the Fund.
It was noted that both board and management functions are listed in the National Decree ‘establishing security functions and implementation of security screenings’. These functions are considered vital to the nation, and are qualified as “A”-category functions (the highest category of all). According to the Security Service of Sint Maarten, ”A” functions must be carried out by individuals who, after review, pose no risk to national security, the democratic legal order, the integrity of public administration nor the security of other vital national interests. The Audit Chamber found that no member of the board, nor management, have been subject to the security screenings. Finally, according to the National Ordinance General Pension Fund Sint Maarten, the approved financial statement, including an auditor’s opinion, must, prior to November 1st, be presented to the General Audit Chamber, the Minister of Finance and the Central Bank of Curaçao and Sint Maarten. The Financial Statement for 2013 was presented eight months late. As such, the General Pension Fund did not meet their legal requirement.
The late submission of financial statements seems to have become routine. The Audit Chamber recommends that APS take action to ensure that the approved financial statement, including the auditor’s opinion, is sent to the General Audit Chamber, the Minister of Finance and the Bank prior to November 1st. Moreover, as the Minister of Finance plays a role in terms of granting the Fund permission to postpone the presentation of financial statements, the Audit Chamber suggests that the minister consider the financial consequences of these decisions. The minister is urged to consider using his authority to issue instructions to the General Pension Fund, should legal compliance remain absent.
The General Pension Fund is responsible for the management of the pension premiums received for government workers, teachers and employees of other public sector organizations on Sint Maarten, and is therefore responsible for paying pensions to participants in a timely fashion. The Fund is subject to annual audits by the General Audit Chamber.
The report “Audit of the 2013 Financial Statement of the General Pension Fund Sint Maarten” is published in both English and Dutch and is available on the website of the General Audit Chamber (www.arsxm.org).