People have long questioned the sustainability of the Social Security Fund. Concerns are inevitable. Until recently, workers’ contributions to the fund stood at MOP45 per month. With some controversy, it has been duplicated to the current MOP90. Of course, such a fund is not viable by contributions alone. The fact that the number of beneficiaries is likely to rise by 50 per cent in the next ten years can only deepen apprehensions.
Leaving matters of inflation and evolution of purchasing power aside basic arithmetic shows that a worker contributing for 40 years to the fund will put in the common basket MOP43,200. That is not enough to pay three months of a pension equivalent to the median wage. Of course, such a system cannot survive unless it has substantial alternative sources of income. That means gambling – both directly and indirectly.
That must be the reason why the Administration reassured us, a few days ago, that the system is sustainable for the next 50 years at least. Fifty years is possibly comforting in more than one way. First, it is so far in the future that it suggests there is nothing worth worrying about – let’s change the subject. Second, most of us are not likely to be there to check the accuracy of the forecast.
Nevertheless, the figures presented, if analysed with some attention, fail to provide much support to the claim. Fifty years makes good news titles but may not survive close inspection.
First of all, it is daring. In normal times, projections at a distance of 50 years are subject to so much uncertainty as to put their usefulness into question. Such time horizon may have its uses in a couple of very specific policy inquiries; in public finance projections, its worth is doubtful. Add to that that any prediction about what will happen here beyond 2049 is mostly pointless.
Moreover, the scope of some figures provided is not clear, and a few other critical ones are missing. A short explanation about the assumptions plus a simple table with the expected evolution of revenues and liabilities could prove quite helpful.
Other figures are just as puzzling if we believe what the press tells us. Last year, the total income from investments stood at MOP4.5 billion. Net income was MOP3.4 billion. These numbers seem to imply management costs were MOP1.1 billion. A little clarification would be very welcome here.
