On the financial sustainability of social security pension fund in Macao: a simulation analysis

This paper constructs a simple simulation model to assess the financial sustainability of the Macao Social Security Fund (FSS). This model takes into consideration the future demographic structure of Macao and some key parameter settings of the FSS to project the balanced contribution necessary to close the financing gap. The simulation results show that the projected contribution (or balanced contribution) is affected substantially by different funding scenarios and pension benefits plan of Macao FSS, and different economic growth hypotheses of Macao. In most occasions, the balanced contribution in the next two decades is far more than the current status quo, suggesting that the financial sustainability of Macao FSS is questionable. Several measures are proposed for Macao SAR government to close the financial gap and maintain the sustainable development of the Macao FSS.