IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/98912.html

Assessing the financial sustainability of parametric pension system reforms: The case of Morocco

Author

Listed:
  • EL-HOUJJAJI, Hind
  • ECHAOUI, Abdellah

Abstract

In 2015, the government adopted a parametric reform intended to deal with the critical financial situation of the CMR civilian pension regime. In this paper, we examine the robustness of this parametric reform by using the Cohort-Component population projection model to the fund’s population during the period 2014-2064. First, we divide the population of the baseline year into cohorts classified by age and sex and then we project the year-on-year demographic transition of each cohort. Second, we lead a projection of the financial situation related to the 2015 parametric reform. Moreover, we project the status quo situation and an alternative scenario where we propose to increase solely the retirement age, and then compare the results with those of the 2015 parametric reform. Our results show that, for the three scenarios, a parametric reform will have a limited effect on the financial situation, in both the long and the short-terms. Under a status quo situation, the reserves are expected to run out in 2023, while under the current parametric reform and our proposed reform, they are expected to expire in 2033. Furthermore, our alternative scenario seems to have some more advantages so that it doesn’t reduce the rights of beneficiaries.

Suggested Citation

  • EL-HOUJJAJI, Hind & ECHAOUI, Abdellah, 2020. "Assessing the financial sustainability of parametric pension system reforms: The case of Morocco," MPRA Paper 98912, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:98912
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/98912/1/MPRA_paper_98912.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Cremer, Helmuth & Pestieau, Pierre, 2000. "Reforming our pension system: Is it a demographic, financial or political problem?," European Economic Review, Elsevier, vol. 44(4-6), pages 974-983, May.
    2. Christophe Hachon, 2008. "Redistribution, Pension Systems and Capital Accumulation," Working Papers halshs-00279167, HAL.
    3. Kati Kuitto, 2018. "Measuring Welfare Entitlement Generosity in Transitional Welfare States: The Case of Post-communist Countries in Central and Eastern Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 136(1), pages 203-224, February.
    4. Jean-Marc Dupuis & Claire El Moudden & Anne Pétron, 2010. "Les systèmes de retraite du Maghreb face au vieillissement démographique," Post-Print halshs-00545149, HAL.
    5. Hasan Altiok & Glenn Jenkins, 2013. "Social security generosity, budgetary deficits and reforms in North Cyprus," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 16(2), pages 218-235.
    6. Tahar ABDESSALEM & Houyem CHEKKI CHERNI, 2016. "Tunisian Pension System Sustainability: Towards A Multidimensional Reform," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 44, pages 165-182.
    7. Richard Disney, 2003. "Public Pension Reform in Europe: Policies, Prospects and Evaluation," The World Economy, Wiley Blackwell, vol. 26(10), pages 1425-1445, November.
    8. Christophe Hachon, 2008. "Redistribution, Pension Systems and Capital Accumulation," Financial Theory and Practice, Institute of Public Finance, vol. 32(3), pages 339-368.
    9. Zaidi, Asghar & Grech, Aaron George & Fuchs, Michael, 2006. "Pension policy in EU25 and its possible impact on elderly poverty," LSE Research Online Documents on Economics 6225, London School of Economics and Political Science, LSE Library.
    10. Rafael Muñoz de Bustillo & Pablo de Pedraza & José Ignacio Antón & Luis Alberto Rivas, 2011. "Working life and retirement pensions in Spain: The simulated impact of a parametric reform," International Social Security Review, John Wiley & Sons, vol. 64(1), pages 73-93, January.
    11. Chourouk Houssi, 2005. "Reality and Challenges of Pension Schemes in Tunisia," International Social Security Review, John Wiley & Sons, vol. 58(1), pages 99-120, January.
    12. Brugiavini, Agar & Galasso, Vincenzo, 2004. "The social security reform process in Italy: where do we stand?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 3(2), pages 165-195, July.
    13. Peinado, Patricia & Serrano, Felipe, 2012. "A dynamic analysis of the effects on pensioners’ welfare of social security reforms," Journal of Pension Economics and Finance, Cambridge University Press, vol. 11(1), pages 71-87, January.
    14. Lyle Scruggs, 2006. "The Generosity of Social Insurance, 1971--2002," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(3), pages 349-364, Autumn.
    15. Grech, Aaron George, 2006. "Elderly poverty in EU25," MPRA Paper 33618, University Library of Munich, Germany.
    16. Luciano Fanti & Luca Gori, 2012. "Fertility and PAYG pensions in the overlapping generations model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 955-961, July.
    17. Alho, Juha M., 1990. "Stochastic methods in population forecasting," International Journal of Forecasting, Elsevier, vol. 6(4), pages 521-530, December.
    18. Vidal-Meliá, Carlos, 2014. "An assessment of the 2011 Spanish pension reform using the Swedish system as a benchmark," Journal of Pension Economics and Finance, Cambridge University Press, vol. 13(3), pages 297-333, July.
    19. Giam Cipriani, 2014. "Population aging and PAYG pensions in the OLG model," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(1), pages 251-256, January.
    20. Sayan, Serdar & Kiraci, Arzdar, 2001. "Parametric pension reform with higher retirement ages: A computational investigation of alternatives for a pay-as-you-go-based pension system," Journal of Economic Dynamics and Control, Elsevier, vol. 25(6-7), pages 951-966, June.
    21. Clara Isabel González & J. Ignacio Conde-Ruiz & Michele Boldrin, 2008. "Immigration and Social Security in Spain," Working Papers 2008-36, FEDEA.
    22. Hasan U. Altiok & Glenn P. Jenkins, 2013. "Social security generosity, budgetary deficits and reforms in North Cyprus," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(2), pages 218-235, June.
    23. Abdellah Boudahrain, 2003. "Social Security Pensions in the Maghreb: A Study of Morocco and Tunisia," International Social Security Review, John Wiley & Sons, vol. 56(3‐4), pages 121-138, November.
    24. Marcello D’Amato & Vincenzo Galasso, 2002. "Assessing the Political Sustainability of Parametric Social Security Reforms: the Case of Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 61(2), pages 171-213, December.
    25. Jean-Marc Dupuis & Claire El Moudden & Anne Pétron, 2010. "Les systèmes de retraite du Maghreb face au vieillissement démographique," Revue Française d'Économie, Programme National Persée, vol. 25(1), pages 79-116.
    26. Abío, G. & Mahieu, G. & Patxot, C., 2004. "On the optimality of PAYG pension systems in an endogenous fertility setting," Journal of Pension Economics and Finance, Cambridge University Press, vol. 3(1), pages 35-62, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Poteraj, Jarosław, 2007. "Systemy emerytalne w Europie - Cypr [Pension systems in Europe - Cyprus]," MPRA Paper 33159, University Library of Munich, Germany.
    2. Peter J. Stauvermann & Ronald R. Kumar, 2016. "Sustainability of A Pay-as-you-Go Pension System in A Small Open Economy with Ageing, Human Capital and Endogenous Fertility," Metroeconomica, Wiley Blackwell, vol. 67(1), pages 2-20, February.
    3. Poteraj, Jarosław, 2008. "Pension systems in 27 EU countries," MPRA Paper 31053, University Library of Munich, Germany.
    4. Ken Tabata, 2015. "Population Aging and Growth: the Effect of PAYG Pension Reform," Discussion Paper Series 125, School of Economics, Kwansei Gakuin University, revised Jan 2015.
    5. repec:cep:sticas:/161 is not listed on IDEAS
    6. Raquel Fonseca & Theptida Sopraseuth, 2005. "Welfare Effects of Social Security Reforms across Europe: the Case of France and Italy," Documents de recherche 05-08, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    7. Eleonora Davalos & Leonardo Fabio Morales, 2017. "Economic crisis promotes fertility decline in poor areas: Evidence from Colombia," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 37(27), pages 867-888.
    8. Figari, Francesco & Matsaganis, Manos & Sutherland, Holly, 2011. "The financial well-being of older people in Europe and the redistributive effects of minimum pension schemes," EUROMOD Working Papers EM7/11, EUROMOD at the Institute for Social and Economic Research.
    9. Zhao Zhang & Caoyuan Ma & Aiping Wang, 2023. "Environmental Governance, Public Health Expenditure, and Economic Growth: Analysis in an OLG Model," IJERPH, MDPI, vol. 20(4), pages 1-21, February.
    10. Luciano Fanti & Luca Gori, 2013. "Fertility-related pensions and cyclical instability," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1209-1232, July.
    11. Paolo Melindi-Ghidi & Willem Sas, 2015. "Invest as you go: how public health investment keeps pension systems healthy," Working Papers of Department of Economics, Leuven 502095, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    12. Kojun Hamada & Akihiko Kaneko & Mitsuyoshi Yanagihara, 2017. "The transfer paradox in a pay-as-you-go pension system," International Economics and Economic Policy, Springer, vol. 14(2), pages 221-238, April.
    13. Aaron George Grech, 2013. "How best to measure pension adequacy," CASE Papers case172, Centre for Analysis of Social Exclusion, LSE.
    14. Marga Peeters, 2012. "Better Safe than Sorry - Individual Risk-free Pension Schemes in the European Union," Contemporary Economics, Vizja University, vol. 6(3), September.
    15. Gurgen Aslanyan, 2014. "The migration challenge for PAYG," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(4), pages 1023-1038, October.
    16. Shiyu Li & Shuanglin Lin, 2024. "Social security reforms, capital accumulation, and welfare: A notional defined contribution system vs a modified PAYG system," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(1), pages 1-34, March.
    17. Aaron George, Grech, 2014. "Pension policy design: The core issues," MPRA Paper 53662, University Library of Munich, Germany.
    18. Grech, Aaron George, 2012. "Evaluating the possible impact of pension reforms on future living standards in Europe," MPRA Paper 39851, University Library of Munich, Germany.
    19. Cipriani, Giam Pietro & Pascucci, Francesco, 2020. "Pension policies in a model with endogenous fertility," Journal of Pension Economics and Finance, Cambridge University Press, vol. 19(1), pages 109-125, January.
    20. Ken Tabata, 2015. "Population Aging and Growth: The Effect of Pay-as-You-Go Pension Reform," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 71(3), pages 385-406, September.
    21. Kojun Hamada & Akihiko Kaneko & Mitsuyoshi Yanagihara, 2024. "Impact of PAYG pensions on country welfare through capital accumulation," International Economics and Economic Policy, Springer, vol. 21(1), pages 207-226, February.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:98912. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.