Morocco's wage hikes boost pension contributions but fail to resolve long-term funding gap

Morocco’s pension funds collected more money in 2025 after public sector wage increases took effect, but financial regulators say the stronger figures mask deep structural problems that continue to threaten the system’s long-term sustainability.

According to the latest Financial Stability Report, pension contributions rose 9.3% to MAD 73 billion in 2025, driven by salary increases agreed under the April 2024 social dialogue agreement. The country’s pension schemes covered approximately 5.1 million contributors while paying benefits to 1.5 million retirees. Pension payouts also increased, rising 5.8% to MAD 75.3 billion.

Despite the stronger cash inflows, the report says Morocco’s basic pension schemes remain structurally imbalanced and that the wage increases provided only temporary relief rather than a lasting solution.

“The basic pension schemes continued in 2025 to record structural imbalances,” the report states, adding that while higher wages generated additional resources for public sector pension funds, they would not significantly extend the financial viability of the country’s largest civil servants’ pension scheme.

The CMR-RPC pension scheme for civil servants collected MAD 35.6 billion in contributions following the latest government wage increase. The additional revenue helped reduce its technical deficit from MAD 7.3 billion to MAD 5.4 billion, while investment income further narrowed its overall deficit from MAD 4.1 billion to MAD 2 billion.

However, regulators cautioned that the fund’s long-term outlook has changed little. They estimate its financial viability remains limited to between five and six years.

The salary increases also eased some of the pressure on the scheme by reducing the contribution rate required for long-term financial balance from 35% to 32%. Nevertheless, employees and employers are still contributing below the level needed to fully finance future obligations, leaving a four-percentage-point funding gap, down from seven percentage points before the wage increases.

The RCAR general pension scheme collected MAD 3.8 billion in contributions in 2025 but paid MAD 8.4 billion in pension benefits. Its technical deficit remained largely unchanged at around MAD 4.5 billion, although investment returns enabled the fund to record a modest overall surplus of MAD 221 million.

The report warns that the scheme’s long-term finances could deteriorate further because the additional contributions generated by higher wages will ultimately lead to higher pension obligations that outweigh the short-term gains.

Meanwhile, the CNSS long-term pension fund remained in surplus during 2025, though its financial position weakened as pension expenditures grew faster than contribution revenues. The report attributes the current surplus to a favorable ratio of contributors to retirees but warns that contribution levels remain insufficient to finance the pension benefits promised over the long term.

The CIMR, Morocco’s largest private pension fund, posted the strongest performance among the country’s major retirement schemes. Contributions increased 9.9% to MAD 13.2 billion, while pension payments reached MAD 7.5 billion.