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Purpose: The objective of this work is to highlight the various reform measures to be undertaken in order to ensure the sustainability of general pension schemes, in particular those aimed at promoting the partial capitalization of pensions in Algeria.
Theoretical framework: Like most countries in the world, the Algerian pension system, which is managed on a PAYG basis, is currently facing major funding problems. Indeed, despite the measures taken to reduce its financial deficit, the latter has persisted since 2013 and has been estimated at almost 2.7 billion USD at the end of 2022. In fact, if measures to lay the foundations for sustained growth, which creates jobs (with improved inclusion in social security), are taken by the government, the system could regain its balance in the short and medium term. However, the problem of population ageing, which could occur in a few decades, reminds the urgent need for structural reforms.
Design/Methodology/Approach: The design of the study is descriptive and analytical. Data for this study were collected from official Algerian sources, namely the NRF and the NOS, while content analysis was conducted by interpreting these data.
Findings: The results of this study show that the Algerian public authorities have taken many measures in recent years to fill the deficit in the pension system, of which the repeal at the end of 2016 of the early and unconditional age pensions with possibility of maintaining the activity until the age of 65, the establishment of the NPRF in 2006, the introduction of additional revenue from customs duties applied to goods import operations from 2020, and the introduction of the NSSF in 2021. Nevertheless, this would in no way escape the insolvency of the pension scheme, hence the need for a structural reform that targets in addition to parametric changes, the introduction of a capitalization dose complementing the current pension system (supplementary pension) for its rebalancing in the short, medium and long term.
Conclusion: the availability of substantial oil revenues may downplay the importance of the financial problems facing the Algerian pension system and their impact on budget stability (according to the NRF, the fund’s deficit stood at 376 billion DZD in 2022 and could reach 1.200 billion DZD in 2030), whereas this oil boom should be used to finance the transition by adopting a partially funded pension scheme. At the same time, this would require more efforts to boost the stock market in order to create an environment conducive to the establishment and development of this funded pillar.
