Pension reform: An inevitable shock!

Will the Government’s offer to the social partners, engaged for several weeks in social dialogue negotiations, be accompanied by proposals concerning the reform of pension schemes? This urgent issue was the subject of several meetings with the Head of Government. The latest meeting was held on Tuesday, April 19, i.e. the day after the announcement of the downward review of growth forecasts for this year. The situation is difficult: households and businesses are facing an unparal-leled rise in prices and the stigma of the health crisis is still there. In such a situation, the announcement of even a gradual pension reform is a shock. Even though the systemic reform will not be carried out quickly, the parametric changes always remain unpopular, especially since they affect the legal retirement age, the contribution rate, and the generosity of the pension schemes.
The overall architecture of the reform has been decided, with a public cluster and a private one, but before achieving this, what remains to be done is to ensure convergence between the different funds, to reduce disparities, and to grant fair remuneration in relation to the contributions paid. This major project is not likely to be easy, but the Government has no other alternatives in the face of the deficits which await all the funds: in 2029 for the CNSS scheme and in 2023 for the CMR (Moroccan Retirement Fund), which manages the retirement of civil servants, and whose reserves are expected to run out as early as 2026. In the case of the RCAR (Collective Retirement Allowance Scheme (RCAR), the technical deficit (experienced since 2004) will widen further to reach 53,6 billion MAD over the 60-year timeline. From 2028 onwards, the pension plan will experience its first financial deficit and the reserves will begin to fall to finance the social benefits to be provided by the plan.
The parametric reform will inevitably be the first step in this gigantic reform project. The reform carried out by the CMR fund for the benefit of civil servants had at least the merit of reducing the accumulated deficits by 53% by 2063 and the technical deficit over the 2017-2026 period by 120 billion MAD. This fund, where contributions reach 28% and the retirement age is set at 63, does not have sufficient leeway for new changes. Salvation will come from a link-up with the RCAR. It remains to be seen which scenario will be favored by the Government for the move to concrete actions. Also remains to be seen what will be the position of the trade unions. Beforehand, the RCAR should proceed with the gradual extension of the retirement age to 63 years. This adjustment will allow RCAR to postpone the date of occurrence of the first deficit and to align itself with the civil pension plan managed by the CMR.

Khadija MASMOUDI