The Social Security Corporation announced that its financial position is very strong and sustainable, noting that contribution revenues are expected to equal insurance expenditures in 2030.
اضافة اعلان
In a press statement issued today by its Media Center, the Public Social Security Corporation released the results of its eleventh actuarial study, which is conducted every three years in accordance with Article (18) of the Social Security Law. The study aims to assess the Corporation’s financial position and the long-term sustainability of its insurance system, and is considered one of the most important analytical tools for forecasting and anticipating the future financial and actuarial status of social protection funds.
The Corporation affirmed that the study results showed that the insurance funds it manages enjoy a very strong and sustainable financial position, particularly work injury, maternity, and unemployment insurance. This reflects the robustness of the Corporation’s financial standing and its ability to meet all obligations toward contributors and retirees, relying on insurance revenues, investment returns, and assets. It stressed the importance of further strengthening financial stability to ensure the ability to cover future obligations without resorting to assets or investment returns.
The Corporation explained that the actuarial study showed that the first breakeven point will occur in 2030, when direct insurance revenues from contributions equal insurance expenditures. It noted that pushing the first breakeven point further into the future is a positive indicator of greater financial stability and sustainability.
It also stated that the second breakeven point is expected in 2038, when annual insurance revenues and investment returns would no longer be sufficient to cover required insurance expenditures, should investment returns not improve.
The Corporation indicated that old-age, disability, and death insurance enjoys a good financial position; however, the study showed that the Corporation’s assets are estimated to be less than ten times its insurance expenditures in the tenth year from the valuation date. This necessitates the implementation of necessary reforms to preserve its sustainability and long-term financial stability, ensuring its continued service to future generations and fulfillment of its obligations.
Regarding the reasons behind rising expenditures for old-age, disability, and death insurance, the Corporation explained that the most prominent factors include the high rate of early retirement, insurance evasion by failing to enroll workers, and demographic pressures. These pressures include increased life expectancy at birth and declining fertility rates, leading to a continuous rise in average age in the Kingdom, fewer new entrants to the labor market, a growing number of people reaching retirement age, and a declining proportion of the working-age population. This is in addition to the imbalance between insurance benefits provided and the period during which insured persons contribute, particularly under old-age, disability, and death insurance.
On early retirement as a key driver of rising expenditures, the Corporation emphasized that early retirement is one of the most significant challenges negatively affecting the long-term sustainability of the insurance system. Early retirement has become the norm rather than the exception, due to its direct impact on increasing pension costs as benefits begin at a relatively young age.
It noted that the proportion of early retirees remains high and constitutes the majority, increasing pressure on insurance resources. According to the Corporation’s data to date, early retirees account for 64% of total retirees.
The Corporation added that many countries around the world do not offer early retirement schemes, and that countries with systems similar to Jordan’s Social Security system record much lower early retirement rates, generally not exceeding 25%. It stressed that reducing early retirement rates would extend breakeven timelines and enhance the sustainability of old-age, disability, and death insurance.
With regard to insurance evasion, the Corporation emphasized that combating this phenomenon in the formal sector, along with extending coverage to workers in the informal sector, is a national priority—particularly given the large number of workers outside the social protection umbrella. A study conducted by the Corporation showed that workers not covered by the provisions of the Social Security Law account for 22.8% of workers in Jordan’s organized labor market.
It explained that it is working continuously to expand coverage to include workers in the informal sector, thereby enhancing social justice and reducing insurance evasion.
The Corporation confirmed that the results of the current study indicate the need for legislative amendments to the Social Security Law to push all breakeven points further into the future, strengthen the sustainability of the insurance system, and protect the rights of future generations.
Regarding upcoming reforms, the Corporation said it will implement the necessary amendments to the Social Security Law in line with demographic developments witnessed in the Kingdom in recent years. It reaffirmed its commitment to full transparency in periodically disclosing actuarial and financial indicators to the public, in line with its national role in achieving social security and economic stability.
It noted that any amendments to the Social Security Law will take into account insured persons who have completed long contribution periods.
The Corporation also confirmed that discussions on amendments and reforms to the Social Security Law will be conducted through a series of national dialogues with relevant stakeholders and experts under the umbrella of the Economic and Social Council. The aim is to reach a modern and balanced law based on key principles, including ensuring the Corporation’s financial sustainability to safeguard the rights of future generations, improving conditions for retirees with low pensions, and preserving the benefits stipulated in the current law for insured persons.
