A policy paper issued by the Phenix Center for Economic Studies, titled “Towards a Fair and Sustainable Social Security System in Jordan,” warned that Jordan’s social security system, although described as “safe in the medium term” according to the results of the eleventh actuarial study of the Social Security Corporation, faces accumulated structural imbalances that could undermine its long-term sustainability if they are not addressed through balanced legislative and policy reforms.
اضافة اعلان
The paper argues that the findings of the latest actuarial study should not be treated as a “surprise,” as many Jordanian experts, specialists, and local research institutions had warned for years about the consequences of the expansion of early retirement, the widening coverage gap, weak governance, and the recent amendments to the law. These factors, the paper notes, have accumulated over time and weakened the fund’s long-term sustainability.
The paper identifies the insurance coverage gap as the most critical challenge. It notes that by the end of November 2025, the number of insured persons reached about 1.66 million, compared to estimates of nearly 3 million workers in the labor market, alongside around 265,000 active retirees. Based on these figures, about 45 percent of the workforce remains outside the social security system, nearly 1.3 million workers without minimum protection against old age, disability, death, and income loss.
According to the paper, this gap reflects a structural flaw in the design of the current social security system, which assumes a traditional employment relationship (worker/employer/formal enterprises), while the reality shows an expanding informal economy, flexible work, platform-based work, and self-employment. It also points out that voluntary coverage in its current form is costly, requiring workers to pay 17 percent of their income, which often turns it into a burden rather than a tool for inclusion, especially given low wages and the high cost of living.
The paper’s strongest warning concerns early retirement, which has become, as widely described, “the rule rather than the exception.” Social security data show that early retirees make up about 64 percent of all retirees and receive around 61 percent of total pension payments. The paper explains that this situation directly disrupts the balance between contribution periods and benefit periods and widens the financing gap between revenues and expensis.
The paper places major responsibility on the government for reinforcing this trend through the repeated use of early retirement as a tool for restructuring or addressing surplus employment, effectively shifting the cost of administrative decisions from the state budget to the Social Security Fund. It notes that nearly 60 percent of early retirees in 2023 came from the public sector.
In contrast, the paper explains that early retirement in the private sector is driven by different factors, mainly low wages. According to the Social Security annual report for 2024, 54 percent of insured workers earn 500 Jordanian dinars or less, and 72 percent earn 600 dinars or less. This pushes many workers to take early retirement in order to receive a pension and then return to the labor market to secure additional income, further deepening vulnerability, evasion, and pressure on the contribution base. The paper calls for limiting early retirement to no more than five years before the old-age retirement age, with a minimum of 300 actual contributions, and for revising wage levels upward so that continued employment becomes economically and socially viable.
The paper also discusses the impact of maintaining the old-age retirement age at 60 for men and 55 for women, arguing that this is no longer consistent with demographic changes in Jordan. It notes that life expectancy in Jordan is about 77 years for women and 74 years for men, meaning longer periods of life after retirement. It compares Jordan with international practices, where the average legal retirement age in many countries is 64.4 for men and 63.6 for women, with a growing trend toward raising it to 66 or 67. The paper considers that a gradual increase in the retirement age for new entrants in Jordan could enhance sustainability if accompanied by supportive labor market and wage policies and well-regulated exceptions for hazardous occupations.
The paper criticizes the 2023 amendments that linked military contributions to economic growth rates and exempted the government from paying full contributions when growth falls below 5 percent. It argues that these measures transfer macroeconomic risks to the Social Security Fund and weaken its financial base. It also rejects the exclusion of workers under the age of 30 from full coverage under some insurance schemes, considering this a violation of the principles of solidarity, equality, and intergenerational justice.
On insurance evasion, the paper notes that evasion rates in formal business enterprises reach 22.8 percent according to Social Security figures, and that about 59 percent of private sector workers are not insured. It calls for modernizing oversight through digital tools, linking databases, and increasing the cost of non-compliance.
Regarding governance, the paper stresses that the independence of the Social Security Corporation from government administrative decisions does not only protect investments, but also safeguards strategic insurance decisions through independent governance.
Finally, the paper proposes a comprehensive reform package consisting of 33 policy recommendations. It concludes by calling for a complementary role for the state budget in supporting the contributions of vulnerable groups within the social security system, reducing chronic reliance on cash assistance and transforming protection from a “reactive response” into more sustainable “social prevention.”
