Pension Reform: The time bomb soon to be defused?
The first meeting of the social partners on a strategic dossier which fascinates has taken place. The pension reform was the subject of a meeting, on Wednesday, October 5, chaired by Nadia Fettah Alaoui, Minister of Finance. Time has come to put in place an approach and a work methodology, which should begin with a “global and unified diagnosis”. A necessary step before moving on to the possible reform scenario, which should lead to the establishment of two clusters, one public and one private.
In any case, the Ministry of Finance wants weekly meetings to be held and measures to be taken by May 2023, all within the framework of the National Commission on Pension Reforms, which will oversee two commissions, one dedicated to the private sector and the other to the public sector. In view of the inventory drawn up by the Ministry of Finance, this dossier promises to be difficult, first of all because the case remains very technical, and secondly because this reform does not only bind current assets but also future generations. Politically, the subject is very sensitive, especially in this difficult economic situation, but the Government does not really have a choice. The issue is linked to the viability of the various funds, and unpopular measures are necessary to generate changes concerning the minimum retirement pension, the retirement age, as well as the generosity of the pension schemes. Today, the system in place is characterized by its low coverage: more than 54% of the active population does not have protection against the risks associated to old age.
The average pensions granted differ from one fund to another: 2,022 Dirhams (202 USD) for the National Social Security Fund (CNSS) versus 5,678 Dirhams (567 USD) for the RCAR (Collective Retirement Allowance Scheme) and 7,873 Dirhams (787 USD) for the civil pension scheme managed by the Moroccan Pension Fund (CMR). The rules for valuing pensions are also heterogeneous, while a large part of private sector employees can recover the wage share if they do not have the minimum of 3,240 days of contributions.
At this level, the agreement reached in April provides for the reduction the minimum number of declared days giving entitlement to an old-age pension at 1,320 days and the reimbursement of the employer’s and employee’s share for insured persons who have not reached this threshold, except that the terms of implementation have not yet been set out! Until then, with the exception of the parametric reform of the civil servants’ pension scheme, the other funds are awaiting changes which should guarantee their sustainability. The overall scheme adopted several years ago remains the establishment of two clusters, one public and one private, one basic scheme, as well as additional ones. Such a scheme requires the unification of calculation methods and rules to ensure convergence, reduce disparities, and grant fair remuneration in relation to the contributions paid. In any case, this titanic project will first require a re-parameterization of the different pensions schemes. That said, the scenario suggested by the study commissioned by Finance proposes a basic scheme capped at twice the minimum wage for the two clusters, one public and one private. This should facilitate later on to a single cluster. Added to this is the freezing of rights acquired in the current systems as well as any revaluation for 10 years. Other proposals include raising the retirement age to 65 in the private and public sectors and increasing contributions. In any case, the debates and discussions promise to be interesting!
Khadija MASMOUDI
