The International Labour Organisation (ILO) has compiled a sobering analysis predicting that by 2036, the reserves of the Social Security and National Insurance Trust (SSNIT) will dwindle to nothing.
This projection foresees a cascade of challenges for beneficiaries, starting as early as 2029 when the combined streams of contributions, investment returns, and other revenue will fall short of meeting the Trust’s annual expenses.
The report’s actuarial examination unveils a concerning trend: the total expenditures, measured as a percentage of insurable earnings (referred to as the pay-as-you-go rate), will soar from 11.5 percent in 2021 to a staggering 29.5 percent by 2095.
This rate reflects the contribution level necessary to cover all scheme expenses year after year, assuming there’s no reserve.
The steep rise in the pay-as-you-go rate is primarily attributed to demographic shifts. As the number of pensioners receiving benefits outpaces the growth of contributors, the strain on the system intensifies, leading to an unsustainable financial burden.
Highlighted in the report are several critical discoveries:
Contributions made annually fall short of covering the total annual expenditures, including benefits and administrative costs, throughout the forecasted period.
Until 2028, investment returns contribute positively to the reserve’s growth.
However, beginning in 2029, the aggregate income—comprising contributions, investment returns, and other revenue—fails to match the annual expenses, resulting in a depletion of the reserve.
By 2036, the reserve is completely depleted.
Post-2036, the requisite annual contribution rate to meet all expenditures equals the pay-as-you-go rate. For instance, this rate stands at 12.4 percent in 2036, escalating to 29.5 percent by 2095
The reserve ratio, representing the ratio of year-end reserve to annual expenditures, declines from 3.4 to 0 between 2021 and 2036. This ratio indicates the number of years the reserve could cover annual expenses in the absence of contributions, investment returns, or other revenue sources.
