Khaberni - The Jordanian Social Security Corporation is considered a fundamental cornerstone in building a social safety network for citizens, as the funds deducted from the salaries of public sector employees constitute a vital part of its financial portfolio. These contributions, which are supposed to secure a dignified future for employees upon retirement or in cases of disability and illness, face numerous challenges today that have led to the erosion of part of their value or delays in the disbursement of their benefits, causing widespread societal concern. Understanding the sources of losses these funds are subject to and developing proactive plans to address future problems is a national necessity to ensure the sustainability of the institution and the achievement of its noble goals.
The main revenue of the Social Security Corporation comes from mandatory contributions deducted monthly from the wages of employees and employers, in addition to investment returns on these funds. The losses these funds face are not only limited to traditional investment challenges, but also extend to structural, operational and administrative factors. Perhaps the most prominent reasons for the deterioration of the funds' value or management difficulties lie in the increasing demographic challenges. Jordan is experiencing steady population growth, accompanied by an increase in life expectancy, which means an increase in the number of retirees compared to the number of active subscribers. This imbalance in the payment and benefit equation puts immense pressure on the institution's actuarial system, requiring periodic reviews of contribution rates and entitlement dates.
As for investment challenges, they represent another front of loss. Historically, the investment orientation of the institution has leaned towards safer assets like government deposits and real estate, although the returns on these assets are generally low and do not match the requirements of inflation and long-term capital growth. In some cases, poorly considered or in-depth investment decisions, especially in certain stages characterized by weak supervision and governance, have led to direct financial losses. Additionally, the slow liquidation of some illiquid investments can lead to freezing of part of the necessary liquidity to meet immediate obligations, creating a sense of financial deficit despite the presence of large total assets.
Furthermore, the problem of evasion and default on payments plays a negative role in weakening expected revenues. Despite regulatory efforts, there is still a gap in collecting due contributions from some business sectors, particularly small and medium enterprises facing economic difficulties. Companies delaying contributions means delaying the institution in achieving the expected returns from these amounts, and sometimes requires lengthy and costly legal proceedings to recover them. This financial leakage places an additional burden on regular subscriptions and threatens the principle of social solidarity that the guarantee is based on.
To address these problems and outline a plan to resolve future challenges, a multi-dimensional approach focusing on financial sustainability, prudent governance, and management modernization must be adopted. The first and most important step is to reassess the actuarial policies of the institution. Transparent and independent actuarial studies should be conducted periodically to determine optimal subscription rates and targeted retirement rates to ensure a balance of revenue and expenses over the next fifty years. This may require flexible reviewing of years of service or setting a certain cap on the salary subject to subscription, with compensatory mechanisms for the most affected sectors.
Secondly, the investment portfolio of the institution must be radically improved. This requires diversifying investments away from over-reliance on low-yield assets. A larger portion of funds should be directed towards strategic investments that serve the national economy and yield lucrative returns, such as investing in vital infrastructure or shares in large companies with stable performance and promising growth, with strict controls for risk management and setting a cap for allowed risk. This step should be accompanied by enhancing the efficiency of investment management teams and relying on international financial expertise to assess investment opportunities.
Thirdly, a strict system for combating evasion and delay in payment must be activated. Modern technology, such as comprehensive electronic linking between the Income Tax Department, the institution, and social security, should be used for immediate detection of any manipulation in salary data or reporting defaults. The penalties applied to defaulters should be deterrent and include, when necessary, suspending some commercial licenses or freezing bank accounts of evading establishments until the due obligations to future retirees are settled.
Fourthly, transparency and accountability in managing the institution must be enhanced. Building employees' trust in the future of their savings requires regularly and detailed informing them about how their money is invested and the results achieved, whether positive or negative. Establishing independent supervisory bodies with broad powers to review investment and management decisions reduces the chances of poorly considered unilateral decisions and ensures that the subscriber's interest is the ultimate goal.
In conclusion, the funds of social security deducted from the salaries of public sector employees represent communal capital that should not be compromised. The losses incurred by the institution, whether due to demographic pressures or weak investment governance, require urgent national action. The future plan must be based on scientific actuarial foundations, smart and well-considered investments for risk, and strict legal application against evasion. Only through these comprehensive and courageous reforms can the continuity of the Social Security Institution as a true guarantor of a decent living for future Jordanian generations be ensured.
