ShareKUWAIT: The Kuwait Economic Society (KES) released the following statement on Sunday commenting on the current political situation in Kuwait, and the actuarial deficit at the social security body and the pensioners’ session at the National Assembly. The following are excerpts of the statement:
First, and before presenting the issue professionally and away from political squabbles, we will emphasize the necessity for forming a Cabinet as soon as possible to create a consensual atmosphere that serves the country and preserves the constitution.
First:
Social security is only an advanced means in defense of the society and its prosperity against any deterioration in its standards of living. It is organized savings by law, and what makes the management of a pension fund different is that dealing with the savings of pensioners and the deductions of workers in both the public and private sectors is an accurate and more sensitive challenge than managing an investment fund of the state, as the issue is not related to the role of the economic policy of the state; rather it follows opportunities for profits in the medium to long term.
There are two basics for the Public Institution for Social Security that must be paid attention to - the first is ensuring a dignified living for pensioners through linking the annual increase of their monthly allocations to equal the increase in the cost of living as the case is worldwide, and having a minimum level of pensions based on statistical studies of living in any country. The second basic is the presentation of creative initiatives and policies that ensure the country’s ability to meet its commitments.
Second:
We are aware that proposals are presented in parliaments with the aim of gaining political loyalty and votes at the expense of their children and their future, but in all parliaments, there is a government that took the oath to protect the people’s funds and interests and fight with all constitutional facets to protect public funds and keep it from becoming a tool in political strife.
Third:
The number of those insured reached nearly 382,000 by March 2019, while those on salaries number nearly 149,000. The number of those who inherit pensions is around 85,000, so the total is nearly 619,000 people who benefit from the social security system. The total funds paid to those eligible and pensioners during the last five years till Dec 2019 is nearly KD 8.44 billion.
The actuarial deficit is the negative result when deducting the value of all social security commitments towards pensioners and the insured from all financial data of social security - the true value of its assets and investments at the end of a certain day. From what we have in numbers, under a lack of transparency and scary coverup in Kuwait, the latest we learned from the former spokesman of the parliamentary budgets committee, former MP Riyadh Al-Adsani, that the deficit doubled in the previous years due to the reduction in investment returns, and the actuarial deficit is the difference between future commitments and the rates of current income. So, it increased from KD 9 billion to KD 17.4 billion in the three fiscal years up to March 2019.
Fourth:
The missing transparency leads to supervision weakness, and this brings bad legislation, so many reports by international bodies that carried out actuary studies gave us numbers with large variations in the actuary rates - from KD 2 billion to KD 19 billion in all open and closed evaluation cases. The action of PIFSS and the investment authority a year ago was a good first step in transparency and was commended by many, and now we say that what you started with became a commitment out of the joint action, which is characterized with transparency.
Fifth:
When we speak about the quality of Kuwait’s retirement system, opinions vary between those who think it is the best in the region and even the world, and those who think otherwise, and it is not possible to decide that the opinion of one side is correct in the absence of a comprehensive system of evaluation and the difficulty in getting trusted and updated information about Kuwait’s retirement system, because it is not subject to international evaluation according to the Global Pension Index used in Saudi Arabia and UAE. This index has been issued annually since 2009 by Mercer.
Finally:
The government policy over the previous years was dealing with sensitive issues with “floatation” policies and the goal was to go through the grillings, so we do not blame the citizen who believes that distributions of social security profits and generations funds is a gained right, as he sees thefts of the country’s wealth without true monitoring. So, we insist on economic reforms, especially those concerned with the sustainability of social security.
