Applied Modeling Techniques and Data Analysis 2

4Introduction of Reserves in Self-adjusting Steering of Parameters of a Pay-As-You-Go Pension Plan

The demographic trend of pension funds in Morocco (increased longevity combined with a drop in birth rates) and the situation of the labor market (a large share of the informal sector in employment) are a major challenge for the future of pay-as-you-go pension schemes in Morocco.

The mandatory Moroccan pension system operates in provisioned distribution and is financed by defined benefits. In the past, the surplus situation of the various plans has allowed them to accumulate significant financial reserves. In order to adapt to the structural challenges related to shortfalls in defined benefit management, several parametric reforms have been carried out, each time in order to postpone the date of exhaustion of reserves. Projections show that future parametric reforms will be unsustainable in terms of contribution rates or career extensions. Thus, it appears that a structural overhaul of the Moroccan pension system is more than necessary. We are going to propose to restructure the current system into a new system working through retirement points and piloted using the Musgrave rule.

4.1. Introduction

The defined benefit pension system in Morocco suffers from demographic problems related first of all to the increase in life expectancy at birth, meaning that retirees are living longer and this increase in life expectancy is combined with a fall in the total fertility rate (average ...