Lawmakers back pension fund top-up amid deficit debate

Lawmakers have backed a plan to top up the civil service pension fund with budget surpluses, as authorities rejected claims that they are fixing a “hole” left by the previous government, arguing that the deficit is unavoidable due to fewer contributors, more retirees, and longer life expectancy.

The Legislative Assembly (AL) gave its initial approval yesterday to a bill that would authorize the government to allocate funds from the central budget surplus to the pension fund for civil servants, in a bid to ensure the long-term sustainability of the retirement and survivors’ benefits scheme for public administration employees.

The bill proposes that the specific percentage of the budget surplus to be allocated be determined by the Chief Executive through an executive order, after consultation with the Financial Services Bureau (DSF), and includes a five-year review mechanism.

The authorities have reiterated that any transfers would only be made from budget surpluses, on the condition that they do not affect public welfare or essential government expenditure.

Introducing the bill, the Secretary for Administration and Justice, Wong Sio Chak, pointed out that with Macau’s population ageing and increasing life expectancy, the pension fund’s expenditure has continued to rise, widening the gap between contribution income and benefit payouts. He added that the government has a statutory obligation to pay retirement and survivors’ benefits, making it necessary to address the fund’s financial issues as early as possible to avoid passing the burden to future generations.

Wong shared the latest financial data for the pension fund: in 2025, contribution income stood at MOP1.324 billion, while total expenditure reached MOP3.458 billion, leaving a deficit of approximately MOP141 million after accounting for existing allocations.

In the first half of this year, contribution income was MOP610 million, while total expenditure was MOP1.882 billion, resulting in a deficit of about MOP207 million. The fund’s annualized rate of return since its establishment to the end of June this year stood at 5.8%, demonstrating its capacity for asset appreciation.

Several lawmakers raised concerns during the debate over the transparency and predictability of the allocation mechanism, suggesting that the government should establish objective benchmarks for determining the transfer amount. Some also questioned why, unlike the 2019 law on reinforcing the Social Security Fund – which explicitly set a fixed 3% annual allocation from the budget surplus – the current bill leaves the percentage to be determined by the Chief Executive’s executive order, raising concerns over how the legislature would effectively exercise its oversight powers.

Wong explained that the allocation would depend on the government’s fiscal position and the actual needs of the pension fund, and would be addressed gradually. He stressed that transfers would only be made from central budget surpluses on the condition that they do not affect public welfare or essential government spending: “Only if there is a surplus will funds be allocated; if there is none, no allocation will be made.”

“The hole exists whether you dig it or not,” he said in response to suggestions that the current administration was merely filling a hole left by its predecessor. He pointed out that the deficit is structurally inevitable due to fewer contributors, more beneficiaries, and longer life expectancy. He stressed that the government has been implementing various allocation measures since 2020 to address the shortfall, and that the current bill is a continuation of efforts to fill the gap rather than pass the problem on to the next generation.