Macau Pension Fund

1084 WordsMay 13, 20125 Pages
Table of Contents Introduction 3 1.0 Introduction Social Security Fund (SSF) was established on 23 March 1990 to provide basic social security for the Macau residents. According to the Act 84/89/M, Social Security fund would provide subsidies or assistance for unemployed, sick and retired people. This was the so-call “the first tier of social security”. At the same time, SSF was positioned as a financially independent fund under the local government. In Macau, Pension fund is included in the SSF, and there is no separation between the management of pension fund and SSF. Instead, pension fund is considered as an expense from the aspect of financial management. All the working people, including non-permanent and permanent…show more content…
During the financial crisis, there was even a negative return recorded in 2008. By ignoring year 2008, there is still a downward trend of the return. According to the 2010 annual report of SSF, 72.43% of SSF balance was deposited into local bank, the remaining proportion was entrusted to fund managing company for only low-risk investments. Under the fix-rate hedging between MOP and HKD, the interest rate of Macau is close to interest rate in Hong Kong, which is similar to US interest rate. Since the 2008 financial crisis, Fed has applied the ultra low interest rate and the interest rate is believed to be maintained until 2014. So, a 72.43% of deposit in an investment portfolio is reasonably considered as inefficient. 3.4 Irregular government subsidies In 2008 Macau government introduced the “Wealth Partaking Scheme”. Each permanent resident will receive the cash check issue by government and each non-permanent residents would received 60% of the partaking amount to permanent resident. The aim of the scheme is to share the result of economic development under the high-inflation economy. However, in some people’s view, the scheme has been considered as supplement of social security and thus expected to transfer the scheme into regular subsidies. Beside the partaking scheme, Macau government established the “Central Saving Plan” – to inject certain capital into individual account of all the permanent attained the age of 22 in the year. The

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