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

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  • 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
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    References listed on IDEAS

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    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

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