The extended study of actuarial report on “Early Old-Age Pension Scheme” was published today (May 6th). After analyzing data on the present value of total benefits received by a plurality of simulated beneficiaries who started to receive old-age pension at different ages and to the age of 80, the report indicates that the current computation method of early pension can achieve relative equity. The report does not recommend the government to give compensation based on the social insurance principle and it has also offered some suggestions for the future development of the social security system. Members of the public can visit the website of the Social Security Fund (abbreviated to the “FSS” in Macao) at www.fss.gov.mo/pt/newscenter/research for the full report.

The extended study of actuarial report employs the computation method that complies with actuarial equivalence to compute the present value of total benefits, by conducting a comparative analysis of the data of 48 simulated beneficiaries who met the benefit requirements between the years 2008 and 2015 and started to receive old-age pension at different ages. The findings show that the current computation method of early old-age pension has tilted in favour of beneficiaries who choose to receive early old-age pension. However, if there is a substantial increase in the amount of old-age pension, beneficiaries who do not choose to receive early old-age pension will receive higher present value of total benefits. It should be noted that the current computation method of early old-age pension has not yet taken into account of factors such as survival probability.

The consultant company believes that fairness is a macro perspective. The decision on early pension application made by different beneficiaries according to their personal wishes, health status, life expectancy and other personal factors could have an impact on the present value of total benefits eventually received by each beneficiary. Thus it is difficult to make an absolute comparison and the current computation method of early old-age pension has already achieved relative equity. In addition, because the social security system operates under the social insurance principle, there is no reverse choice. In order to protect the rights and interests of all beneficiaries under the system, the report does not recommend the government to give compensation.

Regarding the “Proposal for a Moderate Increase” (i.e. the increased amount of old-age pension will not be calculated by percentages) being put forward by some members of the public, the consultant company points out that the proposal will tilt more in favour of beneficiaries receiving early old-age pension. Therefore, it does not recommend the FSS to adopt the proposal.

After analysing the extended study of actuarial report, the FSS believes under the premise of conditions such as fairness, the principle of social insurance system, the purpose of the establishment of early old-age pension scheme, increasing the amount of old-age pension as a measure to benefit the public and the decision to apply for early old-age pension is the beneficiary’s freedom of choice, the FSS agrees with the comments of the report about not giving compensation and not adopting the “Proposal for a Moderate Increase”. In addition, for the sustained development of the overall social security system, the FSS agrees with the recommendations proposed by the consultant company in the last part of the report, which include exploring the possibility of establishing a regular pension adjustment mechanism and increasing the contributions to the social security system.

The measure of early old-age pension was proposed in 2008, with the aim to respond to the need for protection of livelihood for those who reached age 60 with economic hardship or those who need to retire early. The measure, which is not mandatory, allows beneficiaries to receive early old-age pension according to the statutory ratio. Beneficiaries can make a decision on early old-age pension based on their personal wish, health status and the availability of family support. Now the number of beneficiaries currently receiving old-age pension is 86,980, of which more than 62%, or 54,570 people are receiving early old-age pension. In recent years, there has also been an apparent upward trend in the number of people receiving early old-age pension. For example, the number of people applying for old-age pension in 2015 was 10,755. Of them, the number of people whose early old-age pension applications were granted was 8,585, accounting for nearly 80% of the total number of applicants.