Khaberni - The Performance Index Center – Efficiency launched a new policy paper titled "Towards a Fair and Sustainable Social Security Model in Jordan", which aims to present innovative reform proposals that ensure the financial sustainability of the pension system over the long term, and adopts a philosophy of change through empowerment and transparent governance instead of traditional coercive solutions.
The Center pointed out in its paper that the proposed reforms seek to move away from measures that rely on raising the mandatory retirement age, and instead towards encouraging institutional and individual behavior that ensures the rights of future generations and achieves the desired pension justice.
The paper highlighted that the current Social Security Law No. (1) for the year 2014 has gaps in the salary calculation equation that depends on the average of the last years, which creates negative incentives that lead some towards "legal manipulation" by raising wages at the end of service, or forces subscribers to opt for early retirement due to increased cost of contributions in older age stages, putting a significant pressure on the cash flows of the institution.
The paper proposed two fundamental reforms; the first is "governance of the salary equation" through linking the entire career of the subscriber to inflation rates, to ensure the real purchasing power of the salaries and prevent manipulation with final wages. The other proposal is the introduction of a "diminishing subscription system" which reduces the subscription rates gradually once early retirement is eligible, thus reducing the financial burden on employers and encouraging talents to voluntarily stay in the workforce.
The Center affirmed that the implementation of this model will contribute to enhancing the financial sustainability of the Social Security Institution by delaying the disbursement of retirement benefits and raising the actual retirement age in a flexible and motivating way.
The paper concluded with practical recommendations calling for the need to conduct in-depth actuarial studies on these proposals to measure their precise impact, and to open a transparent national dialogue to ensure consensus on the required legislative amendments that serve the public interest and stabilize the social protection system in the kingdom.
