Social Security: New pension levels

Employees with a minimum of 1,320 days’ contributions and a maximum of 3,240 days will be entitled to a retirement pension. The decision, previously endorsed by the Board of Directors of the National Social Security Fund (CNSS)_, will soon be incorporated into the 1972 “Dahir” (Royal decree) on social security.

  It is provided for in Bill 02.24, recently approved by the Government Council. This measure is part of the implementation of social agreements between the government and trade unions.  Once the bill has been approved by Parliament, eligible employees will receive retirement pensions, the amount of which will vary according to the total number of days contributed. Four levels of “revised pensions” are envisaged, ranging from 600 dirhams (USD 60)  for contributions of 1,320 to 1,704 days, to a maximum of 1,000 dirhams (USD 100) for more than 2,856 days of contributions.

This reform, deemed more equitable and financially viable, will represent an average annual cost of around 900 million Dirhams (USD 90 million), or 9.53 billion Dirhams (USD 953 million) over the period 2023-2032.  The reform will apply to policyholders who retired on or after January 1, 2023. It will be retroactive, provided that applications are submitted within 12 months of publication of the legislation in the Official Gazette. After this deadline, the revised old-age pension will be paid from the first day of the month following receipt of the request by the Fund. This “small reform” will also apply to people who retired between January 2023 and the date of entry into force of the law. They will be able to benefit from a review of their pension, with retroactive effect. This applies to those who received a pension in accordance with the provisions of decree number 1.93.29 on the coordination of social security schemes, or bilateral social security agreements between Morocco and certain foreign countries. Requests for review must be submitted by any available means, including electronically, within 12 months of the law coming into force. If the request is submitted after this period, payment of the revised pension will begin on the first day of the month following receipt of the request by the CNSS. When the retirement pension is settled, the most advantageous amount for the insured person will be taken into account.

Under-pricing

Despite the demographic dynamic, the pre-funding rate of the CNSS pension branch stands at 64% versus 65%, according to the latest report by the Systemic Risks Coordination and Monitoring Committee (CCSRS).  This brings us back to the problem of the under-pricing of acquired rights that characterizes the scheme. CNSS has room for maneuver to ensure the long-term sustainability of its pension branch, notably through parametric reforms such as changing the contribution rate and retirement age. The aim of these reforms is to establish a balanced rate structure and greater equity between contributors, by modifying the mechanism for acquiring rights, currently unfavorable to short and long careers, but generous for average careers…

Khadija MASMOUDI