Social security funds

The latest statements published by Al Ghad newspaper on its pages, on Tuesday, April 6, indicated the growth of the assets of the Social Security Investment Fund (SSIF) at the end of the year 2020 to 11.2 billion. The growth in assets comes from two sources: The first is transfers of cash surpluses from the Social Security Corporation (the insurance component), which since the establishment of the general fund in 2003 until the end of the year 2020 amounted to about JD4.9 billion, and the second is the profits of the investment activity (the investment part), which since the foundation of the fund amounted to about JD4.7 billion.

The assets were distributed among a number of investment portfolios, which are government bonds 58.2 per cent, stocks 14.5 per cent money market instruments 13 per cent, real estate investments 6.5 per cent, loans 3.6 per cent and tourism investments 2.6 per cent. As it can be noted, the largest share (58.2 per cent) of the investment portfolio went to government bonds; it is the safest investment for such investment funds as the risk in them reaches zero and achieves a return of 6.1 per cent, which is the highest rate of return among all the fund portfolio investments. 

Investing in government bonds, even if it achieves an acceptable return, does not cause growth in assets such as stocks or real estate investments and factories. The volume of the fund’s profits during 2020 reached JD497.5 million, and thus the nominal rate of return on assets is about 4.4 per cent in 2020, which is a comfortable rate of return in light of these difficult conditions that the economy and the world are going through due to closures and reluctant in investment.

The comfortable situation of social security enabled the Social Security Corporation (SSC) to launch many private social protection programmes in response to the economic challenges posed by the coronavirus pandemic, which had the greatest impact on ensuring the sustainability of many private sector businesses, as about 1.5 million people benefitted from them. As mentioned in the statement, programmes directed to individuals are mostly recoverable advances and most of them were funded from the insurance surplus of the corporation.

Among the important development projects carried out by the SSIF during the year 2020: Establishing the Insurance Company for Investment and Agricultural Industries, which will establish its first agricultural project on an area of 25,000 dunums in the south of the Kingdom to produce vegetables and animal feed, which will contribute to achieving food security. In addition to the establishment of three solar power stations with a capacity of 15MW. The completion of the project will result in a saving in the corporation’s expenditures by approximately JD5 million annually, and the fund will recover the cost of the project, which amounted to JD17 million, within three years.

The fund’s investments in the Amman Stock Exchange, which amount to about 11 per cent of the market’s value, are long-term strategic investments that are far from speculation. They are concentrated in 50 public shareholding companies whose strong performance is distributed through sectors.

The SSFI is a long-term strategic investor keen to direct its investments to the various vital sectors to achieve a meaningful return within acceptable levels of risk, and in partnership with the private sector. The majority of its investments fall within the vital sectors of the national economy such as the agricultural sector, the education and health sectors, as well as its current investments in other economic sectors such as tourism, mining, telecommunications, banking, traditional and renewable energy, and development areas. The fund also aims to look at the major projects that are offered at the national level, such as the National Carrier Project for the desalination and transportation of the Red Sea water.

High contributions to social security, which amount to about 21.75 per cent of subscribers' salaries, between salary deductions and the contributions of the parties in which the insurance subscriber works should qualify those who were forced to early retire and old retirees for obtaining a respected health insurance that resembles workers service and reflects the health progress the Jordanian state has achieved.

It is worth noting that the real financial position of the SSC and its investment fund is reflected in the results of actuarial studies carried out, at least once every three years, by an internationally accredited actuarial body for the benefit of the SSC.