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Tuesday , September 21 2021

Handling funds for retirees

For nearly a year, Kuwait’s credit ratings have been continuously downgraded by international rating agencies, which have great influence in the world of finance.

A negative rating affects the financial reputation of any country, limits its ability to borrow and increases its cost due to the risk factor.

Despite the tendency (by some people) to place the responsibility on the shoulders of senior officials for showing reluctance to take appropriate decisions and cover the deficit, it is the direct responsibility of the Minister of Finance, who is primarily responsible for the state’s financial position and reputation.

Accordingly, the responsibility for the continued decline in the rating falls on him, and his silence or his negative attitude has caused us to lose a lot, reputation and money.

On the other hand, there were reports of the government’s intention to instruct the Public Institution for Social Security to share a portion of the billions in profits that it recently achieved, noting the silence of the Minister of Finance  to comment on the dangerous news though he is the first who should be concerned of our situation but it appears as if he is least concerned.

The Public Institution for Social Security is the agency concerned with ensuring the livelihood of retirees. The institution’s funds consist of the monthly sums deducted from the salaries of participants in the security program in addition to the contributions made by government institutions, civil and military, and companies on behalf of their employees.

The institution invests this money in the best way in order to be able to meet its huge obligations to retirees on time. The institution’s funds were previously looted by some corrupt people, until it was given to someone to manage it in a sincere and prudent manner and fix its affairs, before handing it over to the next (current administration) which has done well with sincerity and taking prudent decisions, or previously taken by the previous administration.

As a result, the investment assets have reached nearly $40 billion dollars, bringing in unprecedented rates of return, exceeding the negative repercussions of the coronavirus.

The proposal to involve retirees, and I am one of them, in profits is unprecedented in the history of pension funds in the world, and it involves a great risk to the financial position of the institution, as its continuation in achieving such high rates of profits in the future is not guaranteed at all, so what will the institution do if it achieves losses in the coming years, will it ask retirees to share in the loss?

The proceeds of pension funds are kept for reinvestment to meet the fund’s current and future obligations towards retirees, whose numbers are increasing every day, and these profits are therefore not a place for retirees to participate in, and if this happens, it will have serious consequences.

e-mail: a.alsarraf@alqabas.com.kw

By Ahmad alsarraf

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