Since 2023, Macau’s ageing index has exceeded 100 percent for the first time, meaning that the elderly population has become larger than the population of children and young people. Although total social security revenue in 2024 has basically returned to the 2019 level, expenditure on benefits and social support continues to rise.
Taking the old-age pension as an example, after five years without any adjustment in the amount, the total paid in 2024 (MOP 5.17 billion) was already MOP 950 million higher than in 2020.
The revenue and financial strength of the Social Security Fund are not only related to its ability to pay existing benefits on a regular basis; they also influence whether there is room to raise pensions and other allowances.
This is believed to be one of the reasons why, since 2020, “3 percent of the balance from the execution of the central budget” has been allocated to the Fund.
In addition to regular benefits, the Fund also plays an essential role in the social protection network, so its financial structure must be sufficiently resilient.
The pandemic showed that gaming allocations, which account for a significant share of the Fund’s income, are highly sensitive to external conditions: the amount injected fell from MOP 5.01 billion in 2019 to MOP 780 million in 2022.
In addition, investment returns are uncertain: in 2019 there was a surplus of MOP 5.5 billion, but in 2022 investment losses reached as much as MOP 7.7 billion.
To ensure the long-term sustainability of the system, it is recommended that the Macao SAR Government review the current funding structure and actively study strategies to increase revenue.
Given that, in 2024, the Macao SAR’s Financial Reserve achieved a favourable investment return, with gains of more than MOP 30 billion, and considering that the ageing index has exceeded 100 percent and that rigid expenditures such as pensions are growing significantly, it is suggested that a special allocation mechanism be created so that, in future, part of the excess gains from the Financial Reserve can be injected directly into the Fund to strengthen its reserves.
At present, up to 3 percent of gross gaming revenue is allocated to “urban development, tourism promotion and social security”, and the share designated for social security increased from 60 percent to 75 percent in 2013.
As this mechanism has been in place for many years – and given that the Government’s investment and development expenditure plans already cover “urban development” – it is recommended that, where conditions allow, resources be concentrated and the percentage allocated to social security be clearly increased, creating a stronger basis for a reasonable adjustment of pensions in the future.
