The Social Security Corporation published, on its website on Tuesday, the results of the eleventh actuarial study, which is conducted every 3 years according to Article (18) of the Social Security Law.
It aims to assess the financial position of the corporation and the sustainability of its insurance over the long term, as it is one of the most important analytical tools for predicting and foreseeing the future of the financial and actuarial situation of social protection funds.
The results of the study showed that the insurance funds managed by it have a very good and sustainable financial situation, especially for work injury insurance, maternity, and unemployment insurance, which reflects the solidity of the financial position of the corporation and its ability to meet all its obligations towards participants and retirees, relying on insurance revenues, investment returns, and assets, with an 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 corporation indicated that the actuarial study showed that the first breakeven point will be in 2030, where direct insurance revenues from contributions are equal to insurance expenditures, indicating that the temporal distance of the first breakeven point is a positive indicator of the stability and better sustainability of the financial position of the corporation.
It also explained that the second breakeven point is expected in 2038, at which 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 corporation pointed out that old-age, disability, and death insurance is in a good financial position, but the study showed that the estimated assets of the corporation are less than ten times its insurance expenses for the tenth year from the date of evaluation, which necessitates the implementation of necessary reforms to maintain its sustainability and financial stability over the long term, ensuring its continuation in providing services to future generations and meeting its obligations.
Regarding the reasons for the increase in expenses for old-age, disability, and death insurance, the corporation explained that among the most prominent of these reasons is the high rate of early retirement, insurance evasion in including workers, in addition to demographic pressures represented by rising life expectancy at birth and declining fertility rates, leading to a continuous increase in average ages in the kingdom, a decrease in the number of people entering the labor market, an increase in the number of people reaching retirement age, and a decline in the proportion of the working-age population, as well as an imbalance between the insurance benefits provided and the period spent by the insured as participants, especially in old-age, disability, and death insurance.
As for early retirement being one of the main reasons for the high expenses of old-age, disability, and death insurance, the corporation confirmed that the phenomenon of early retirement is one of the most prominent challenges that negatively affect the sustainability of the insurance system in the long term, as early retirement has become the norm and not the exception, due to its direct effect in increasing the retirement bill as a result of starting the disbursement of retirement salaries at an early age.
It pointed out that the proportion of early retirees is still high and constitutes the majority, which contributes to the increased pressure on insurance resources, indicating that the proportion of early retirement according to the corporation's data to date reached (64%) of the total retirees.
The corporation added that a large number of countries in the world do not have a system for early retirement, and that countries that adopt systems similar to the social security system in Jordan record much lower rates of early retirement, which do not exceed (25%) in most cases, confirming that a decrease in the rate of early retirement contributes to extending the durations of breakeven points and enhancing the ability of old-age, disability, and death insurance to continue and sustain.
In relation to insurance evasion, the corporation affirmed that combating this phenomenon in the organized sector, along with including workers in the informal sector, is a national priority, especially in light of the large numbers of workers outside the social protection umbrella, where the study conducted by the corporation showed that the proportion of workers not covered by the provisions of the social security law constitutes (22.8%) of workers in the organized Jordanian labor market.
It indicated that it is continuously working to expand the coverage umbrella to include workers in the informal sector, thereby enhancing social justice and reducing insurance evasion.
The corporation confirmed that the results of the current study show the need for legislative amendments to the social security law, which ensures the migration of all breakeven points to longer time periods, and enhances the sustainability of the insurance system and protects the rights of future generations.
Regarding the anticipated reforms, the corporation explained that it will work on implementing the necessary reforms to the social security law in line with the demographic indicators that have been observed in the kingdom during the past period, confirming its commitment to transparently disclose its actuarial and financial indicators to its audience on a regular basis, in line with its national role in achieving social security and economic stability.
Here is the summary in pictures on our website:
