Report reveals billions lost in Moroccan pension system, calls government to pay back dues

The Observatory of Government Work advocated a gradual and systemic reform of the pension systems based on a medium-term reform agenda spanning over no less than 10 years, in the aim of implementing a fair, comprehensive, and sustainable reform.

The proposal stressed the need for the state to assume responsibility for not paying its dues to the pension fund during the period of 1959 to 1997, hitting its revenue with a loss of more than 25 billion dirhams.

In a recent report obtained by Hespress, the aforementioned observatory called for a review of the laws regulating the management of pension fund reserves in a way that increases the return of their investments by no less than 8 or 9 percent annually and improves their contribution to financing the national economy. 

They also appealed for a removal of the exception of the National Social Security Fund(NSSF) from managing its reserve funds, which would increase its profitability, address the problem of deficit, and increase the sustainability of its reserves.

The report also emphasized the necessity of implementing comprehensive and simultaneous reform policies for each of the pension systems, the compensation fund, and the tax system, especially in regards to income tax for wage-earners and employees, as well as improving the national reference tariff to ensure that the reform does not affect the purchasing power of retirees and exempting wage earners and employees over the age of 55 from the impact of the expected reform, while focusing on the younger age groups.

Among the recommendations contained in the aforementioned document was setting a minimum retirement pension of no less than 1,800 dirhams to maintain the purchasing power of the low-income earners of the working class, and allowing a relative increase in the ceiling of the proposed Retirement Compensation Arrangements Regulations in accordance with the wage capacity of the workers, as well as building bridges between the public and private pension systems in order to facilitate the transition of the active labor market population between the public and private sectors.

The Observatory stressed the need to waste less time and implement the reform by 2024 at the latest, and to work on implementing a legislative framework that acts as a roadmap for reforming pension systems and takes a mandatory nature for all individuals, contractors, government sectors, territorial groups, public institutions and free professions, and work on enacting a procedure Solidarity levy, allocated to fund social protection workshops in general and pension systems in particular.

 Criticism towards the government scenario

The Observatory of Government Work directed a number of remarks towards the pension system reforms scenario proposed by the government, in which it criticized what it described as the government’s unjustified cover-up of the results of the study carried out by the Office of Studies on reforming pension systems, and criticized their putting the social and economic parties under obligation of confidentiality and pushing them to keep the proposals under the covers, which goes against the societal nature of the file.

The report criticized the inadequateness of the approved arrangements regulations for calculating the retirement compensation threshold and the blatant discriminatory treatment within their vague supplementary pension proposal, as well as the entity charged with its management and supervision.

The Observatory noted with regret the government’s lack of due attention to the real causes of the crisis; the state’s long-standing refusal to pay its dues to pension funds, which resulted in a structural deficit in its reserves and accelerated its technical deficit.

 The report also criticized the government for what was described as an unjustifiable disregard of the issue of the debts owed to the military pension system, estimated at 7 billion dirhams for the benefit of the Moroccan Pension Fund, and the failure of the proposals presented by the government to include any vision with regard to improving the profitability and effectiveness of investments in the reserves of pension funds, and evaluating the aspects of their adoption and employment.

The same report criticized what the observatory considered as a responsibility evasion and an unjustifiable disregard for the disastrous management of the pension funds and the significant waste of their finances and reserves, despite numerous reports on this matter (The fact-finding mission report from the Council of Advisors, and the High Council of Auditors report regarding the civil pension system).

The document also confirmed that the government relies on a one-sided reform approach with three measures (raising the retirement age, reducing retirement compensation, and raising subscription values), the responsibility and impact of which fully fall on the procedure. Meanwhile the state flies under the radar, not assuming responsibility for the structural imbalances it had caused over decades, not to mention the silent treatment the reform of pension funds, a strategic and decisive issue for wide segments of Moroccan society, receives during societal discussion.