Khaberni - The Social Security Corporation announced in a press release issued by its media center today the results of the actuarial study eleventh, which is conducted every three years pursuant to the provisions of Article (18) of the Social Security Law, aiming to assess the financial position of the institution and the continuing sustainability of its insurance over the long term, as it is one of the most important analytical tools for predicting and foreseeing the future financial and actuarial situation of social protection funds.
The institution confirmed that the results of the study showed that the insurance funds it manages have a very good and sustainable financial position, especially insurance for work injuries, maternity, and unemployment, reflecting the robustness of the institution’s financial position and its ability to fulfill all its obligations towards participants and retirees, relying on insurance revenues and investment returns and assets, with emphasis on the importance of enhancing financial stability to ensure the ability to cover future obligations without the need to use assets or investment returns.
The institution also pointed out that the actuarial study showed that the first breakeven point would be in 2030, where direct insurance revenues from subscriptions equal insurance expenses, indicating that the temporal distance of the first breakeven point is a positive indicator of better stability and sustainability of the institution's financial situation.
It also clarified that the second breakeven point is expected in 2038, where insurance revenues and annual investment returns are not sufficient to cover the required insurance expenses, in case the return on investment does not improve.
The institution indicated that insurance for old age, disability, and death enjoys a good financial position, but the study showed that the institution's estimated assets are less than ten times its insurance expenses for the tenth year from the date of assessment, which requires the implementation of necessary reforms to maintain its sustainability and financial stability in the long term, ensuring its continuity in providing services to future generations and fulfilling its commitments.
Regarding the reasons for the high expenses of insurance for old age, disability, and death, the institution explained that among the main reasons are the increased pace of early retirement, insurance evasion from covering employees, in addition to demographic pressures represented by increased life expectancy at birth and declining fertility rates, leading to a continuous increase in the average age in the kingdom, a decrease in the number of people entering the labor market, an increase in the population reaching retirement age, and a decline in the proportion of the working-age population, in addition to the imbalance between the insurance benefits provided and the period spent by the insured as subscribers, especially in insurance for old age, disability, and death.
In relation to early retirement being one of the main reasons for the high expenses of insurance for old age, disability, and death, the institution confirmed that the phenomenon of early retirement is one of the most prominent challenges negatively impacting the sustainability of the insurance system in the long term, as early retirement has become the norm rather than the exception, having a direct impact on increasing the retirement bill as a result of starting to disburse retirement salaries at an early age.
It also stated that the proportion of early retirees remains high and constitutes the majority, contributing to increasing pressure on insurance resources, pointing out that the proportion of early retirement according to the institution's data to date has reached (64%) of total retirees.
It added that a large number of countries around the world do not provide a system for early retirement, and that countries that adopt systems similar to the social security system in Jordan record much lower early retirement rates, not exceeding in most cases (25%), confirming that the low proportion of early retirement contributes to lengthening breakeven points and enhancing the capacity of insurance for old age, disability, and death to continue and sustain.
Regarding insurance evasion, the institution emphasized that combating this phenomenon in the organized sector, along with including employees in the informal sector, is a national priority, especially in light of the large number of workers outside the social protection umbrella, where the study conducted by the institution showed that the percentage of workers not covered by the provisions of the Social Security Law constitutes (22.8%) of workers in the organized Jordanian labor market.
It also noted that it is continuously working on broadening the inclusion umbrella to cover workers in the informal sector, enhancing social justice and reducing insurance evasion.
The institution emphasized that the current study results show the need for legislative amendments to the Social Security Law, to ensure moving all breakeven points to longer time periods, and enhancing the sustainability of the insurance system and protecting the rights of future generations.
Regarding the anticipated reforms, the institution clarified that it will implement the necessary reforms to the Social Security Law in line with the demographic indicators that the kingdom has witnessed during the past period, confirming its commitment to transparently disclose its actuarial and financial indicators to its audience regularly, committed to its national role in achieving social security and economic stability.
It noted that any amendments that will be made to the Social Security Law will take into consideration the insured who have spent long periods subscribing to social security.
It also confirmed that discussions related to amendments and reforms to the Social Security Law will take place within a series of national dialogues with various concerned partners and experts, through the Economic and Social Council, aiming to reach a modern and balanced law based on key principles, represented in sustaining the financial situation of the institution to preserve the rights of future generations, improving the conditions of retirees with low retirement salaries, and not affecting the benefits stipulated in the current law for the insured.
