Welcomes you to our Pension Mixer 2017 - Guardian Groupmyguardiangroup.com › Final_Presentaties_GGF_Pension_Mixer.pdfSolvency margin of 168.3% 37,618 63,315 25,697 Required solvency

Welcomes you to our Pension Mixer 2017

Diego Fränkel, MM Managing Director Guardian Group

Aruba – Bonaire – St. Maarten

Caribbean / Netherlands

15875 16070 16485

16819 17252 17476

2012 2013 2014 2015 2016 2017

465,776,435 520,616,164

573,212,706 615,605,036

677,412,407

2012 2013 2014 2015 2016

42%

Solvency margin of 168.3%

37,618

63,315

25,697

Required solvency Present solvency Surplus

Live easy Danki pa e confiansa

Drs. Rignald Martis Manager Life and Employee Benefits

Guardian Group Fatum Aruba

Pension administration

How, What & Why

Why

What

How

Agenda

•  Pension refresher

•  Why important to have an up-to-date pension administration;

•  What does it mean to have an up-to-date pension

administration; and •  How to have an up-to-date pension administration

Income at retirement age

The government gives a basic income as of the retirement age (65 years).

The AOV amounts to max. Afl. 1.864 monthly (p/couple, Afl. 932 p/p; single Afl.

1.107).

Besides the AOV there can be a pension regulation through the employer or private

savings.

= private savings = pension through employer = Government pension

18 †

Salary

Age 65

1.107

Old age pension

Death before retirement age

18 35 † employee

† Survivor

Survivors’ pension

Salary

Age 40 49 58 64

500 671 848 1.107

Orphans’ pension 0-9: 368 (395)

10-14: 395 (433)

15-24: 433 (500)


The government provides the basic income in case of death before retirement age. The amount paid out is minimum Afl. 500 gross per month, depending on the age

of the survivor.

Besides the survivors’ pension there can be a pension regulation through the employer

or private savings

Death after retirement age

Old age pension

At death after retirement age, the surviving partner will get his/her AOV. The AOV is independent and amounts to Afl. 1.107 gross

monthly.

Besides the AOV there can be a pension regulation through the employer or private savings.

18 † Survivor

Salary

Age 65

1.107

†

1.107


The pension capital is accumulated annually by 1. Pension premium (employers’ – and employees’ part) 2. Interest

Saving for retirement

Retirement date

Disposable premium and interest

•  12 times monthly base salary

•  With(out) commission

•  With(out) other salary components

•  Variable hours

•  Parttime

Pension premium

Amount

To be able to have the correct amount(s) payable calculated (and insured).

Service To be able to provide rapid assistance to our customers and start paying them their money as soon as possible.

Why

Why

What

How

Employees’ choices

Extra premium (higher capital accumulated)

Insure orphans’ pension

(less premium for capital accumulation)

Insure survivors’ pension (less premium for capital accumulation)

What

Why

What

How

•  Marriage (insure Survivors’ pension)

•  Divorce (cancel Survivors’ pension)

•  Birth of child (insure Orphans’ pension)

•  Emigration

•  Transfer of capital

What

Why

What

How

Mutation forms Payroll reports

(pension premium deducted and employee details) Insurance contracts

Contract servicer

Employee Benefit Consultant

How

Please write down your question(s) for the panel discussion

Thank you for your attention

Closing

Johann Hosein Manager Investment

Guardian Group Fatum Curacao

Guardian Group Fatum Pension Mixer 2017

Pension Investing: Safety and Return Maximization

27

Primary Trends affecAng Pension Needs

Ø  Increased life expectancy

Ø  Aging Populations

28

Current Pension Products in the Dutch Caribbean

Ø  Issued based on guarantees by Pension Provider

Ø  Fixed interest rates for defined periods of time

Pension Premium: AWG 500 per month for 30 years at varying rates 3%-‐6%

0 50,000

100,000 150,000 200,000 250,000 300,000 350,000 400,000

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Policy Value

(AWG)

Number of Years

Illustration of Pension Products

Guaranteed Rate Plan

29

Guardian Group -‐ 4 Pillars of Strength and Security

1)  Strong Asset Base: With origins daBng back to 1847, the Group’s total assets stood at AWG 6.4 Billion as at December 2016

2)  High Quality Customer Service: Over 1000 agents and brokers servicing clients across the Group in 21 countries

3)  Transparency: Guardian Holding Limited is listed on the Trinidad and Tobago Stock Exchange and regularly distributes financial informaBon and hosts shareholder meeBngs and client events.

4)  Prudent Investment Philosophy: World class investment philosophy with security of principal, diversificaBon and opBmum long-‐term growth as our corner-‐stones. Subsidiaries of the Group are rated A-‐ Excellent by AM Best

30

PorTolio Mix

Diversified Strategic Asset Allocation

Government Bonds 35%

Corporate Loans 10%

Deposits 5% Mortgages

5%

Bonds (Overseas) 30%

Equity (Overseas) 10%

Other 5%

Government Bonds Corporate Loans Deposits Mortgages Bonds (Overseas) Equity (Overseas) Other

31

Local Investment Environment

Government Bonds in the Dutch Caribbean Aruba

•  S&P has assigned a BBB+ RaBng with a Stable Outlook. Weak private consumpBon versus recovering tourism

•  Excess cash in the market compared to few investment opportuniBes has meant that interest rates have declined substanBally. Aruba 10 year government bonds offered 4.75% in Sept 2016, 4.25% in Feb 2017 and 4.00% in April 2017.

Curacao •  In 2016, S&P affirmed its A-‐ RaBng with a Stable Outlook. S&P projects that Curaçao's

real per capita GDP growth will be slightly negaBve during 2016-‐2018 •  However Dutch parBcipaBon means that interest rates are extremely low. In 2016 the

Government raised Naf 59 million at 1% for 30 years.

Real GDP Growth (% yoy) 2014 2015 2016e 2017f 2018f 2019f Data Source

Aruba 0.80% -0.7% 3.0% 3.1% 3.2% 3.9% BMI

Curacao -1.10% 0.6% 0.8% 1.1% 1.0% -0.7% BMI

32

Local Investment Environment

2014 2015 2016

Aruba Residential Mortgages 6.80% 6.10% 5.75%

Corporate Bonds, Loans and Deposits •  Includes Government Controlled CorporaBons and Private Companies •  Ogen unrated hence more in-‐depth due diligence (fundamental analysis – economy, industry

and company) is conducted. •  Few opportuniBes and rates on offer are also relaBvely low. Generally in the region of 4% to

6%. ResidenAal Mortgages •  Involves in-‐depth due diligence on each applicant’s income and criBcal assessment of

collateral •  Very compeBBve asset class with various levels of interest rates, loan to value raBos

and other key terms including fixed or floaBng rates and penalBes for prepayment Interest Rates as at End of Year

33

Overseas Investment Environment

Overseas Investments – Fixed Income and EquiAes Major Economic Theme -‐ US Policy (The Trump administraBon has promoted lower corporate taxes and reduced regulaBon which bodes well for US investments)

ü  Provide much needed investment opportuniBes and diversificaBon benefits (regions,

sectors, currencies) ü  Offer amracBve returns but with some volaBlity

2010 2011 2012 2013 2014 2015 2016

US Gov’t 10 year Bond Yields (End of Year) 3.37% 1.80% 1.99% 2.64% 1.64% 1.92% 2.45%

US Gov’t 10 year Bonds (Annual Total Return) 8.46% 16.04% 2.97% -9.10% 10.75% 1.28% 0.69%

S&P 500 (US Equities) (Annual Total Return) 14.82% 2.10% 15.89% 32.15% 13.52% 1.38% 11.74%

34

Future of Pension Products

Unit Linked ü  This pension product will involve the purchase of units in an investment pornolio

ü  Different investment pornolios may be made available to provide choices and variety to meet clients’ different needs

ü  The value of the pension product will depend on the value of the investments within the investment pornolio

ü  Over the long-‐term, clients’ more direct parBcipaBon in the investment pornolio performance will likely result in higher medium and long-‐term returns.

35

Future of Pension Products

Pension Premium: AWG 500 per month for 30 years

0

100,000

200,000

300,000

400,000

500,000

600,000

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Policy Value

(AWG)

Number of Years

Illustration of Pension Products

Guaranteed Rate Plan Unit Linked Plan

36

Guardian Group Pension InvesAng

Summary ü  Guardian Group Fatum – Strong, Client-‐focused, Transparent, Prudent

ü  Difficult Investment Environment but we conBnue to seek out and maximize current opportuniBes

ü  New, innovaBve products are on the horizon to provide more choices to bemer meet client needs and to improve client returns

37

Guardian Group Pension InvesAng

THANK YOU

Frank Snijders, MSc Partner–Tax at BDO-WTS

TAX “TRICKS” FOR YOUR OPTIMAL PENSION MIX May 12, 2017 By Frank Snijders, Partner – Tax at BDO-WTS

Agenda TAX “TRICKS” FOR YOUR OPTIMAL PENSION MIX Tax deductibility of pension premiums Taxation of pension benefits Transfer of pension capital or pension rights

Page 41

Tax Deductibility of Pension Premiums

Page 42


Employers’ part of mandatory pension plan premiums not taxable •  Employers’ part is at least half of the total premium •  Minimum total premium 6% Employee’s part of mandatory pension plan premiums fully tax deductible •  Pension premiums are pre-tax, i.e. reduce the wage tax

and social security premiums due

Page 43

Full years’ income + Wage in kind = Gross income - Mandatory pension premiums - Labor expenses - Savings fund = Taxable basis for social premiums - Social premiums - Wage tax reduction - Tax deduction for children = Taxable basis for wage tax


How does that work? •  Assume salary of AWG 45,000 per year •  Assume total pension premium employer 6% + employee 6% = 12% of pensionable

salary of AWG 45,000 -  Employer premium 6% = AWG 2,700 -  Employee premium 6% = AWG 2,700+/+ -  Total premium 12% = AWG 5,400

•  Tax effect of deductibility employee’s pension premiums (excluding all other deductions): -  Wage tax due before pension premium AWG 2,598 -  Wage tax due after pension premium AWG 2,207-/- -  Tax benefit of pension deductibility AWG 391

Page 44


Premium paid is not completely added to the pension capital saved, but will also cover: •  Administration costs of Insurer (percentage mentioned in premium agreement) •  Partners’ pension (optional) •  Orphan’s pension (optional) •  Disability insurance (optional) •  Guarantee fees (if any, depending on contract)

Page 45

Premium 5,400.00 Orhpan's pension (131.00) Administration costs (540.00) Disability insurance (148.50) Guarantee fee (54.00) Actual pension savings 4,526.50

16%


LAP – minimum Defined Contribution system •  At least 6% of pensionable salary without AOV offset •  At least 10% of pensionable salary minus AOV offset of

AWG 12,336 Defined Benefit system •  At least 1% of pensionable salary minus AOV offset of

AWG 17,616

LvIB - maximum Defined Contribution system •  Maximum of 25% of pensionable salary with or without

AOV offset Defined Benefit system •  Maximum of 1.75% of pensionable salary minus AOV offset

of AWG 17,616 for final pay systems (“eindloonregeling”) •  Maximum of 2.00% of pensionable salary minus AOV offset

of AWG 17,616 for average pay systems (“middelloonregeling”)

Page 46


Employee can contribute voluntary, fully tax deductible, pension premiums up to the maximum amounts

How does that work? •  Assume total pension premium employer 6% + employee 6% = 12% of pensionable salary of

AWG 45,000 -  Employer premium 6% = AWG 2,700 -  Employee premium 6% = AWG 2,700+/+ -  Total premium 12% = AWG 5,400

•  Additional pension premium by employee: -  Maximum premium 25% = AWG 11,250 -  Minus total premium 12% = AWG 5,400-/- -  Additional maximum premium 13% = AWG 5,850

•  Bonuses may be used as additional premium by employee (no payroll taxes due now)

Page 47


Page 48

In case of a Pension deficit in the last five years, an additional pension premium can be paid Pension deficit can occur when e.g.: •  In certain years no pension build up took place (e.g. 2011 and prior years) •  Not all salary components have been included in the pension base Defined Contribution system •  Maximum premium of 120% of 25% of pensionable salary with or without AOV offset

Defined Benefit System •  Maximum of 120% of 2.00% of pensionable salary minus AOV offset of AWG 17,616 for average pay systems (“middelloonregeling”) •  In a final pay system, no pension deficit exists


How does that work? •  Assume total pension premium employer 6% + employee 6% = 12% of pensionable

salary of AWG 45,000 -  Employer premium 6% = AWG 2,700 -  Employee premium 6% = AWG 2,700+/+ -  Total premium 12% = AWG 5,400

•  Additional pension premium by employee: -  Maximum premium 25% = AWG 11,250 -  Minus total premium 12% = AWG 5,400-/- -  Additional maximum premium 13% = AWG 5,850

•  Additional pension premium for pension deficit last 5 years by employee: -  Maximum premium 30% = AWG 13,500 -  Minus maximum premium 25% = AWG 11,250-/- -  Additional maximum premium 5% = AWG 2,250

Page 49


Premiums paid for: •  Life insurance •  Life annuity insurance •  Voluntary pension insurance which meets the criterion of LvIB including the

maximum amounts but deducting the mandatory pension premiums

are tax deductible up to a maximum of AWG 10,000 per year

Page 50

Tax Deductibility of Pension Premiums How does premium deduction for voluntary pension insurance work? •  Assume total mandatory pension premium employee 6% of pensionable salary of AWG

45,000 -  Maximum deduction allowed = AWG 10,000 -  Mandatory employee premium 6% = AWG 2,700-/- -  Total tax deductible premium = AWG 7,300

In the examples used, the employee can deduct for pensions: •  AWG 2,700 for mandatory pension plan (6% x AWG 45,000) •  AWG 2,048 for AOV/AWW (5% x AWG 40,950) •  AWG 5,850 for voluntary pension premiums under mandatory pension plan (13% x AWG 45,000) •  AWG 2,250 for additional pension premiums in case of pension deficit (5% x AWG 45,000) •  AWG 7,300 for voluntary pension premiums under private insurance •  AWG 20,148 total to be saved for pension with minimum of AWG 4,748 per year!

Page 51

Taxation of Pension Benefits

Page 52


Page 53

Private life insurance/ savings

Government pension AWG 1,864 for couple AWG 1,107 for single person

General Pension Act

Taxation of Pension Benefits Upon reaching the pension age, the pension capital (premium system) must be used to purchase a monthly life annuity, which is: •  For insured person only; or •  If a registered partner exists, should include a partners’ pension

•  Unless the partner builds up a pension of his/ her own and waives the rights to a partners’ pension

An exception for the purchase of a monthly life annuity exists for: •  Monthly annuities lower than AWG 50 per month, in which case:

•  Pension capital may be bought off against the actuarial value •  (Semi-)annual life annuities may be purchased

•  Persons born before 1957 with a pension capital lower than AWG 12,500, in which case: •  Pension capital may be bought off in the year in which they become 60

Page 54


Page 55

Insurer 1 AWG 24,000 p/y


AOV AWG 13,000 p/y

AWG 20,455 tax exempt amount

Tax withheld by SVb: AWG nil

Tax withheld by Insurer 1: AWG 262

Tax withheld by Insurer 2: AWG nil


Page 56

AWG 20,455 tax exempt amount

Tax withheld by SVb: AWG nil

Actually due: AWG nil

Tax withheld by Insurer 1: AWG 262

Actually due: AWG 1,469

Tax withheld by Insurer 2: AWG nil

Actually due: AWG 839



AOV AWG 13,000 p/y


The surprise at the end of the year due to the progressive tax system: Income tax assessment for the year 2017 AWG 2,608 Income tax withheld for the year 2017 AWG 232 Income tax to be paid on assessment AWG 2,376

Page 57


In case of emigration from Aruba (deregistration from civil registry), employee can, after three years have lapsed, request the Insurance Company to buy-off the pension Insurance company will have to follow a procedure when receiving request: •  Check with civil registry if indeed employee has been deregistered for more than three

years •  Check with tax authorities if there are any outstanding amounts in income tax and/or social

security premiums •  Within six weeks, reserve value minus costs Insurance Company (AWG 250 maximum) minus

any outstanding income tax or social security premiums amounts (which will be paid by Insurance Company to Tax Collector directly) will be paid out to employee

Page 58


Emigrated employee is considered a non-resident for tax purposes General rule: pension income taxable in country of residence, irrelevant of where the pension was actually built up Non-residents are only subject to Aruba income tax for certain, specifically mentioned, sources of Aruba related income like amongst others: •  Income from current or prior employment, profession or enterprise, except for pensions •  Income from current or prior employment as (supervisory) director of a resident entity •  Pension income paid via budget of Aruba or via APFA

Pension buy-off by non-resident is henceforth NOT subject to Aruba income tax!

Page 59

Transfer of Pension Capital

Page 60


When an employee changes employers, he/she may: •  Make the pension free of premium payments •  Transfer the reserve value of the pension to another:

•  Insurer •  Entrepreneurial Pension Fund, unless the employee was insured for more than

10 years at an Entrepreneurial Pension Fund

The employee who leaves the employer and is insured at an Insurer, may make his/ her pension free of premium payments for a maximum of three months

Page 61


Conditions upon transfer: •  New pension insurer must accept employee •  Transfer within four (4) weeks •  Maximum costs to be charged by Insurance Company AWG 250

Page 62

QUESTIONS? Please write them down for the Panel Discussion THANK YOU FOR YOUR ATTENTION

Hilde Rodriguez-Taekema Notaris

S

Cuido i Cuida Guardian Group Fatum 12 mei 2017

Matrimonio

S  In good times and bad times

S  Comunidad di bienes/condicion matrimonial

S  Divorcio/separacion

S  Division pensioen di biehes abase di ley of convenio

Bibando hunto/ partnerschap registra

S  Confirma den contract/ley (na Aruba?)

S  Tin derecho como pareha?

S  Registracion na fondo posibel?

Obligacion pa cuida bon

S  Na fabor di pareha i/of yiu

S  Durante bida i despues…

Herencia

S  Existente

S  Futuro

S  Testament

Pensioen

S  Areglo banda di ley of Bo contract di convivensia

Panel Discussion

Join us for our Mixer at the outside terrace.

Documents

Welcomes you to our Pension Mixer 2017 - Guardian Groupmyguardiangroup.com › Final_Presentaties_GGF_Pension_Mixer.pdfSolvency margin of 168.3% 37,618 63,315 25,697 Required solvency