Social Security Fund’s expenses grow almost three times faster than income

The city’s Social Security Fund, which supports the pension and several allowances here, has seen its expenses for 2014 increase at a pace that is almost three times that of the revenue it received as the growth in gaming income has slowed during the year.
According to the 2014 annual report of the Fund, its revenue increased 8.61 per cent year-on-year to MOP14 billion (US$1.79 billion) while expenses spent mostly on supporting the pension and allowances increased 22.8 per cent totalling MOP2.85 billion for the year.
Nearly 42 per cent of the overall revenue the Social Security Fund registered for 2014 was from the government’s appropriation from the city’s gaming income, which grew by only 2.58 per cent year-on-year to MOP5.88 billion, as Macau has seen the onset of a gaming slump since June of last year. This appropriation from the city’s gaming revenue grew an annual 50 per cent for 2013.
The Social Security Fund has remained hugely reliant upon the government’s financial support, as gaming income, the reservation of 1 per cent of the 2014 fiscal budget as well as an extra injection of MOP5 billion in the year, have together occupied about 90 per cent of the Fund’s total income.
From 2013 to 2016, the MSAR Government plans to inject an extra MOP37 billion into the Social Security Fund, a move that the Fund’s president, Ip Peng Kin, noted in early 2013 was to prevent the Fund from going bankrupt after 50 years – given that the contribution by employers and employees here is minimal.
Regarding this special injection programme, the International Monetary Authority expressed concern last year, questioning MSAR’s long-term strategy to support the pensions here when the population over the age of 65 is set to double in the next decade and grow more than fourfold by 2030.
For the whole of 2014 until present, there has been no consensus between the employer and employee parties in the Standing Committee for the Social Co-ordination of Social Affairs regarding how to enhance the current contribution from 45 patacas to 90 patacas, an increase that would be important in helping sustain the Fund.
As shown in the 2014 annual report, the contribution by employers and employees here has only increased by 2.32 per cent year-on-year to MOP184.34 million, a segment that accounts for only 1.32 per cent of the Fund’s total income.
The size of this contribution amount is even smaller than the income derived from the tax on employing non-resident workers here: this tax, which is levied on employers at MOP200 per non-resident worker employed, contributed a total of MOP309 million to the Fund last year, representing a year-on-year increase of 28.6 per cent.
Faster increase in expenses
The higher spending on the city’s pension and several allowances, as well as higher salaries for civil servants working for the Fund, has supported the 22.8 per cent increase in the Fund’s expenses for 2014, the Social Security Fund said in the annual report.
The total expenses spent on pensions and the several allowances here increased 18.9 per cent year-on-year to MOP2.6 billion last year, the report said. A bulk of these social expenses, about MOP1.24 billion, have been spent on the advance withdrawal of pensions from the city’s beneficiaries.
Beneficiaries aged 60 but below 65 years old can withdraw their pensions in advance. This group increased by nearly one-fifth to 44,358 people in 2014, the fund noted.
Some 96,809 beneficiaries received pension and allowances from the Fund last year, which is 9.2 per cent more than 2013. Of these beneficiaries, nearly 80 per cent asked for pensions.
For 2014, the Social Security Fund registered a surplus of MOP11.16 billion representing an increase of 5.5 per cent.