The retirement pension system in Algeria : parametric analysis and reform options

Abstract EN

All over the world, these retirement systems, operate on a pay-as-you-go basis, have undertaken reforms of the imbalances observed: the first reforms put in place are the parametric reforms, that is to say, operating parameters of the system, such as the contribution rate, the starting age, the reference salary, etc.

, without modifying its mode of operation.

The purpose of this article is to determine the parameters of the pension system disequilibrium in Algeria and to try to determine a possible path of parametric reform.

This analysis is based on an econometric model, the overlapping generations model; this model determines the balanced points by using macroeconomic and demographic data from 2001 to 2018 in Algeria.

This study shows that the imbalance is too great to be restored by parametric reforms alone, the equilibrium contribution rate of the pension branch, as it emerges from the model used is almost three times higher than the current global contribution rate of all social security branches in Algeria, a simultaneous structural reform (change in the operating mode of the system) should be considered, taking into account the career patterns in the sectors of activity as well as the wage disparities.