An economic reading in the data of the actuarial study for social security suggests that the latest actuarial study, issued by the Public Institution for Social Security, indicates that the insurance system is stable today, but it faces long-term structural challenges. The results of the latest actuarial study do not indicate an immediate financial crisis in the Social Security Institution, nor at the same time justify complete reassurance of its sustainability in the long term.
First: The reserve is strong... but time is a crucial factor according to the study, the reserve of the old-age, disability, and death insurance branch represents about 9 times the annual expenditure for 2024, which is a good indicator for the short term, and the contributions exceed expenses until 2030. However, after 2030, expenses will exceed the value of contributions, then the total contributions and returns of the Social Security Funds Investment Fund in 2038, starting the depletion of the reserve reaching its expected exhaustion in 2050.
Second: The problem is not investment. The fundâs actual average return in recent years was 5.8%, which is higher than the previous assumptions, indicating that investment management is not the cause of the expected future shortfall.
Third: Demographic pressure is the real challenge. A prominent indicator in the study is the declining ratio of contributors to retirees and beneficiaries:
•4.5 contributors per retiree in 2024
•1.6 contributors per retiree in 2060
•Less than one contributor per retiree by the end of the century, reflecting an increasing aging population, directly affecting the financing system based on intergenerational solidarity. Fourth: Long-term funding gap and public premium one of the main indicators is the average public premium, which the study estimated at about 44.8% of wages, covering a long period from 2020 to 2109, this figure reflects the theoretical rate of contributions needed to ensure the old-age, disability, and death insurance branchâs ability to cover all its future obligations.
In comparison, the current actual rate of contributions is only about 18%, indicating a long-term actuarial gap, highlighting the importance of gradual reform to ensure the sustainability of the retirement system. Fifth: The economic conclusion calls for gradual and well-considered reform including: •Improving the management of the Social Security Funds Investment Fund to maximize returns.
•Enhancing workforce participation and increasing compliance with contributions.
•Modifying some standards such as the retirement age and pension calculation mechanisms gradually. Conclusion The Public Institution for Social Security and the Social Security Funds Investment Fund provide a safety margin today, but demographic pressures make the turning point start after 2030. Early and well-considered reform allows multiple options, and avoids the system enforced intervention or a sudden increase in contributions.
Khaled Al-Rababah, economic expert and analyst
