Dr. Hamad Kasasbeh

The amendments to the Social Security Law have sparked wide public debate. The discussion has not been purely technical; it has touched the core relationship between contributors and the system. The issue is not only about numbers, but about the level of trust in the system’s ability to continue meeting its obligations. This raises a central question: Do these amendments represent proactive reform that strengthens sustainability, or are they a delayed response to imbalances that have accumulated over time?

To understand the scope of this debate, one must return to the nature of the system itself. Social security is not an individual savings account, but a solidarity-based system in which the working generation finances the pensions of retirees. Its sustainability is therefore not primarily a political issue, but a financial equation. If one of its components weakens, the numbers will eventually assert their logic. With life expectancy in Jordan exceeding 74 years, pension payments now extend over longer periods, increasing pressure on financial balance and making reform more urgent.

Within this context, the amendments were introduced based on the actuarial study. They include gradually raising the retirement age to 65 for men and 60 for women, increasing the required contribution period for normal retirement to 240 months, requiring 360 months for early retirement, raising the minimum pension to 200 Jordanian dinars, and expanding social security coverage. These steps are financially rational, yet they focus primarily on eligibility conditions rather than on the broader economic structure that determines the system’s capacity to generate sustainable funding.

This leads to a deeper question: Is adjusting eligibility conditions alone sufficient to ensure sustainability? The real challenge does not lie in the retirement age itself, but in the ratio of active contributors to pension beneficiaries. This ratio represents the most critical indicator of financial balance. When the contributor base declines relative to beneficiaries, pressure on resources increases and financing future obligations becomes more complex. Any reform that does not directly address this equation remains partial, regardless of its importance.

At this point, insurance reform intersects directly with labor market realities. The success of these amendments cannot be separated from employment conditions in the national economy. High unemployment, the expansion of informal work, and weak job creation in the formal sector all reduce the contributor base and limit revenue growth. Consequently, even a technically sound insurance reform will remain limited in impact unless accompanied by policies that promote formal employment, raise productivity, and support productive investment.

From this perspective, expanding coverage and increasing formal job opportunities are not merely complementary measures; they are essential conditions for sustainability. Every new formal job means an additional contributor supporting current cash flows. Conversely, leaving segments of the labor market outside the insurance umbrella postpones a financing gap that may widen over time and turn into a larger burden in the future.

Sustainability, however, does not depend solely on contributions. It is also shaped by the efficiency with which accumulated resources are managed. The institution’s investment performance represents a central pillar of long-term financing. Improvements in stable real returns can ease future pressures. If projections indicate mounting stress ahead, part of the solution lies in strengthening investment decision-making, governance, and transparency. These funds represent the savings of generations, and any weakness in their management directly affects the system’s long-term outlook and public confidence.

In addition, another dimension relates to managing cyclical economic risks. Economies inevitably pass through periods of slowdown or rising unemployment that temporarily affect contribution revenues. Establishing an insurance stabilization mechanism or a dedicated reserve fund to absorb short-term fluctuations would enhance flexibility and institutional stability without resorting to sudden changes in eligibility rules.

Ultimately, sustainability is not a one-time legislative act, but a continuous balancing process between eligibility conditions, labor market strength, investment efficiency, and risk management. The current amendments represent an important step within a broader reform path, yet they are not the final destination. Pension systems rarely collapse suddenly; rather, they gradually erode when structural imbalances are left unaddressed. The real choice today is not between amending the law or maintaining the status quo, but between comprehensive reform now or bearing a higher cost later. In the end, sustainability is measured not by the intensity of debate, but by the system’s ability to honor its promises to future generations without creating unfunded burdens.