10 January 2013

Morocco to Reform State Pension System - Prime Minister

Rabat, Morocco — Morocco plans structural reform of its state pension system during the five-year term of the current government, including an increase in the retirement age, Prime Minister Abdelilah Benkirane said.

"Our pension systems are at stake. No one wants to reach a situation like in Greece," Benkirane said in a speech to parliament late on Wednesday. "Of course we will negotiate with unions, but raising the retirement age is an obligation to avoid collapse."

The deficit of the Moroccan Pension Fund (CMR) for public sector workers is currently on track to reach 1.28 billion dirhams ($151 million) in 2014, 24.85 billion dirhams in 2021 and 45.66 billion dirhams in 2030, Benkirane said.

In 2013, the CMR will start to dip into its reserves, and the reserves of all of Morocco's pension funds will be drained by 2050 if there is no reform, the government's High Planning Authority said in a report published last month.

The agency added that only 27 percent of Morocco's economically active population was contributing to the pension system, against 80 percent in countries of the Organisation for Economic Co-operation and Development.

In addition to the CMR, the government operates a pension fund for private sector workers and one for workers on state contracts.

Benkirane, appointed prime minister after elections in late 2011, did not give any further details about the planned pension reforms.

The government wants to repair its finances after spending heavily to ensure social peace in the wake of the Arab Spring uprisings elsewhere in the region.

Last August, the International Monetary Fund approved a $6.2 billion precautionary line of credit for Morocco over two years while urging reform of the country's subsidy and pension systems, though it did not formally tie the reforms to the aid.

Earlier this month, a government minister said the government might start reforming its expensive system of subsidies for food and energy in June, if a political decision to do so were taken.

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