Morocco offers a structured pension system comprising six basic schemes and three supplementary schemes. These schemes vary in their legal frameworks, management approaches, financial resources, and benefits. Additionally, they differ in how they function—some operate on a pay-as-you-go model, while others follow a fully funded approach. The benefits provided also depend on whether they are based on defined benefits or defined contributions.

Pay-As-You-Go vs. Fully Funded Pension Plans

Pay-As-You-Go Plan

This model, which is widely used in basic pension schemes, is based on an intergenerational contract. Contributions from the working population finance the pensions of current retirees. In turn, future retirees will depend on the next generation of workers to sustain the system. The structure ensures a continuous flow of funds, maintaining a balance between contributions and pension disbursements.

Fully Funded Plan

Unlike the pay-as-you-go system, a fully funded pension plan relies on individual savings. Employees contribute to their own retirement funds, which are then invested in assets such as real estate and stocks. Upon retirement, the accumulated capital and its returns finance the pension. This method allows for personal financial planning and is often used by private insurance companies and supplementary pension funds.

Defined Benefit vs. Defined Contribution Plans

Defined Benefit Plans

In this model, the retirement benefits are pre-determined based on a calculation formula, typically involving the last or average salaries over a set period. The pension amount depends on factors such as years of service and an annual accrual rate. Additionally, disability pensions under this scheme often account for the expected working years until retirement.

The advantage of a defined benefit plan is predictability, as retirees receive a guaranteed percentage of their salary. However, employers or managing entities bear the risk of ensuring sufficient funds to meet future obligations.

Defined Contribution Plans

In contrast, defined contribution plans focus on setting the contribution amounts first. The pension benefits received upon retirement depend on the total contributions and the returns generated from investments. This model is similar to a savings-based system, offering greater cost control for employers. However, since the pension amount depends on market performance, retirees may face uncertainty regarding their exact retirement income.

What is Social Protection for Retired Individuals?

Social protection in retirement encompasses various financial security measures that mitigate the risks associated with aging, disability, and loss of income. It ensures that retirees receive adequate financial support while covering potential expenses, such as healthcare and living costs.

How is Retirement Coverage Implemented in Morocco?

Morocco’s pension coverage is divided into basic and supplementary schemes, managed by different institutions:

Basic Pension Schemes:

1. Civil Pension Scheme (CMR): Covers government employees and workers in public institutions.
2. Military Pension Scheme (CMR): Designed for personnel in the armed forces, auxiliary forces, and royal gendarmerie.
3. Group Retirement Allowance Scheme (RCAR): A state-supervised pension fund covering non-established officials and public sector employees.
4. General Social Security Scheme (CNSS): Provides pension coverage for private sector employees.
5. Pension Scheme for Self-Employed Workers (CNSS): Designed for freelancers, entrepreneurs, and independent professionals.

Supplementary Pension Schemes:

1. Moroccan Inter-Professional Retirement (CIMR): A voluntary pension scheme open to private sector employees and self-employed individuals.
2. RCAR Supplementary Scheme: Provides additional pension benefits for high-earning employees affiliated with the general RCAR scheme.
3. CMR-ATTAKMILI (Optional): An extra pension savings plan for civil and military employees under the CMR scheme.

Conclusion

Morocco’s pension system is designed to provide financial security for retirees through a mix of mandatory and voluntary pension plans. Whether through pay-as-you-go or fully funded schemes, and whether under defined benefit or defined contribution models, individuals have various options to ensure financial stability in retirement. Understanding these structures helps both employees and self-employed workers make informed decisions about their retirement planning.

For the latest updates on Morocco’s pension schemes, visit the official website of ACAPS