Abstract
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.
Acknowledgements
We express gratitude to Associate Professor Pengjun Chen for providing comments on this paper during the 2nd Insurance and Reinsurance Forum at Xiamen University. We acknowledge Associate Professor Yueng-Wah Khong, Associate Professor Ying-Gui Wang, and Dr. Zu-Cheng Zhao for their suggestions on the research work. We extend appreciation to the two research assistants, Wanlin Yan and Tongzhang Wu, for assisting with this project.
Disclosure statement
The authors report there are no competing interests to declare.
Data availability statement
The authors confirm that the data supporting the findings of this study are presented in the article. The raw data supporting the results of this study are available from the corresponding author upon request.
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Lu Liu
Lu Liu, Assistant Professor, Faculty of Finance, City University of Macau.
Adrian (Wai Kong) Cheung
Adrian (Wai Kong) Cheung, Professor and Dean, Faculty of Finance, City University of Macau.
Lifei Xue
Lifei Xue, Assistant Professor, Faculty of Finance, City University of Macau.
Shiyan Lou
Shiyan Lou, Associate Professor, Faculty of Finance, City University of Macau.
Yang Chen
Yang Chen, Associate Professor, School of Public Management, Liaoning University.