Macau’s legacy civil service pension system is expected to record an annual deficit of MOP2.77 billion by 2031. In response, the government has introduced a bill that would allow part of the city’s annual budget surplus to be transferred to the Pension Fund.
Sales Marques compares the projected deficit with the MOP5.31 billion budget surplus forecast for 2026. “The projected MOP2.77 billion deficit would account for 52% of that amount.”
While acknowledging that the actual surplus could ultimately be higher, the economist argues that the scale of the transfers highlights the need for a long-term structural solution.
“Even if the actual budget surplus turns out to be substantially higher, this will undoubtedly strengthen the case for reforming the system so that annual funding does not rely directly on budget surplus transfers, but instead comes from investment returns generated by the financial reserves or another equivalent funding mechanism,” he told PLATFORM.
The bill approved by the Executive Council would authorize the Chief Executive to determine each year how much of the budget surplus should be transferred to the Pension Fund. The government describes the measure as a mechanism to ensure sufficient resources are available to meet pension obligations.
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The financial imbalance stems from the steady decline in the number of contributors and the growing number of beneficiaries. As of June, the legacy pension system was paying more than 7,100 pensions while having only 6,465 active contributors.
By 2031, the Pension Fund expects the number of pension recipients to rise to 9,150 while the number of contributors falls to just 3,290. Over the next five years, expenditures under the system could reach MOP6.4 billion, generating a cumulative deficit of approximately MOP2.7 billion.
Closed to new members since 2007
The public-sector retirement and survivors’ pension system was closed to new contributors in 2007, leaving membership limited to civil servants who were already employed by the government and chose to remain under the old scheme.
“The sustainability of this system stems from the fact that it has been closed to new contributors since 2007. At the same time, honoring the Macau SAR government’s obligations to those who remained in the scheme is a matter of keeping commitments that were made,” Sales Marques says.
Given the projected financial outlook, he adds, “the need to provide the Pension Fund with new sources of financing is both essential and unavoidable.”
The system’s obligations could extend well beyond the lifetimes of current retirees. “It should be remembered that the retirement and survivors’ pension scheme also provides eligible heirs with a monthly pension equal to 50 percent of the deceased beneficiary’s pension, extending these financial obligations for potentially another generation.”
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The government’s proposal does not establish either a permanent transfer mechanism or a fixed percentage of the budget surplus. Instead, the amount transferred each year would depend on both the Pension Fund’s financial position and the budget surplus available for that year.
Macau recorded a budget surplus of MOP18.6 billion during the first five months of 2026, up 55.5 percent from the same period a year earlier. In April, the city’s financial reserves reached a record high of MOP697.3 billion.
Regarding the use of budget surpluses to finance the pension system, Sales Marques says the proposal “is probably the most appropriate among a range of difficult options, given Macau’s long-standing history of generating positive annual budget surpluses, largely driven by gaming tax revenue.”
