You are here

Reforming governments’ funder

Apr 21,2024 - Last updated at Apr 21,2024

The Social Security Corporation (SSC), through the Social Security Investment Fund, constituted a major source of financing in the state’s general budget, as the last two governments relied primarily and largely on the Social Security Investment Fund to finance general budgets to cover the deficit and repay debts.

Borrowing from the Social Security Investment Fund was an easy and secure option. The important question is: Without the existence of the Social Security Investment Fund, how would the previous government and the current government be able to pay the budget deficit, debts and the rest of the entitlements?

Another important question is: Will the government pay the installments due to the Social Security Investment Fund from other funding sources or take new loans from the Social Security Investment Fund itself? Does the government have funding sources to pay billions from the Social Security Investment Fund? Is simply paying government interest on loans enough? How does the SSC manage when pension obligations exceed contributions? How will monthly salaries be disbursed to retirees from various sectors?

It is certain that future governments will face greater challenges, especially with the increase in pension obligations on the SSC, in addition to the government’s inability to actually repay (not recycle) the debts of the Social Security Investment Fund. Hence, the opportunity for governments to borrow from the Social Security Investment Fund diminishes.

Returning to the heart of the matter, the SSC and the Social Security Investment Fund are currently facing serious challenges that require thinking and analysis to reach real solutions today before tomorrow. Therefore, I propose below a set of corrective measures to get things back to normal.

I see the need to direct social security investments to areas that have a multiplier effect on the economy in terms of generating job opportunities and operating various sectors. This means that the Social Security Investment Fund should not only lend to governments under the pretext that interest rates are high and that government lending is guaranteed.

I propose to discontinue all Social Security insurances and funds except for old-age retirement, because they burden the SSC and consume Social Security funds in the end.

The SSC, in accordance with its applicable law, entered into several insurances and funds, including maternity insurance, unemployment insurance, health insurance, and others. The SSC currently receives contributions, but in the future, it will have obligations, not to mention that its large amounts distract its efforts and at the expense of more important issues. In short, I see the SSC withdrawing from all of them, especially health insurance, as this is not its role, but rather the role of other parties and the responsibility of employers. I suggest focusing on old-age insurance and employing all available capabilities to ensure the efficient management of its contributions and obligations, as it is the primary goal of the existence of the SSC.

In the distant past, and given the existence of civil, military, municipal and other retirement schemes at that time, inclusion in social security was directed to those subject to the Labour Law because it regulates the affairs of participants during their working years. For this reason, the Board of Directors of the SSC was formed from representatives of the government, employers and workers, in analogy to the tripartite committee for labour affairs formed under the Labor Law. Now all sectors are covered by social security, including workers in the civil, military, public security and even judicial authorities. Therefore, the tripartite composition formed by the corporation’s board of directors no longer represents reality. I know very well that there is a slight representation of the armed forces on the Board of Directors and the SSC’s committees, but this is not enough. There must be adequate representation of all parties, whether employers, employees or workers. I do not see a need for a Board of Directors of the SSC. The insurance aspect deals with contributions collected according to the law. It is sufficient to have a general director assisted by the SSC’s employees and reporting to the minister.

As for the investment part, which is responsible for investing the social security funds, this needs review, governance and empowerment through a specialised board that is responsible for investing the social security funds, while being directly subject to the follow-up and control of the competent constitutional and legal institutions, and publishing comprehensive reports periodically on performance. because it is public money, and I see caution in dealing with it as no different from caution in dealing with endowment money. As for employers, some of whom are Jordanian and some of different nationalities, there is the possibility of changing the job titles of employers and their family members who are registered as employees in their companies, with the aim of raising the value of their salaries during the years on which the retirement salary calculation depends, which in some old cases was the last two years and then became the last three years or five years.

The fear is greater if these salaries are fictitious and unreal, but high contributions are paid for them, the goal of which is to raise the value of the pension that will be paid to the employer in the future from social security.

Therefore, I strongly suggest that the retirement salary be calculated on the basis of the average salary during the entire contribution period, even if it is 30 years, and not just the last three or five years, to prevent imaginary jumps in salary during the last years of service.

I propose to stop the contribution of expatriate workers, with all due respect to them, to Social Security, like many countries in the world, because the vast majority of them apply to the concept of “dangerous professions” and early retirement, and this is costly to the social security, as the disbursement of pension salaries extends over many years. In addition, pension salaries spent outside the country and therefore the economy does not benefit from it. This is in addition to the possibility of encouraging the occurrence or perhaps the occurrence of some paid fraudulent practices that may be carried out in agreement with weak-minded employers of different nationalities that work to raise the value of contributions during the period included in calculating the retirement salary.

Finally, would not it be better to remove members of the armed forces and public security services from the umbrella of social security and have them have an independent retirement fund as a security necessity? I strongly push in this direction, because they are the nation’s shield and impenetrable fortress.

up
21 users have voted.

Add new comment

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.


Newsletter

Get top stories and blog posts emailed to you each day.

PDF