The Working Group for the Study and Conception of the Social Security System, created by the Government in the begin of this year, presented to the Council of Ministers, in August, its proposal for the creation of a contributive and single system of Social Security, based on a distribution model, with the possibility of creating complementary systems. This proposal was drafted after several weeks of work during which this inter-ministerial group – composed by technicians from the Ministry of Social Solidarity, Ministry of Health, Ministry of Finance, Secretariat of State for Professional Training and Employment and the Secretariat of State for Defence, Secretariat of State of Security and the Public Service Commission.- met at least once a week.

The distribution model is, according to the Secretary of State for Social Security, “much more sympathetic, because a new generation contributes in attributing the retirement to the old generation, creating a cycle. There is another model, the capitalization one, where each worker contributes only for himself. Regarding the choice of a single model, all countries and organizations that are supporting us technically in this matter, were unanimous: to put all the workers from the public sector together with the private sector in a single system, is the best option”.

The Government wants, however, to guarantee that it analyses all the hypotheses and above all, that it chooses the most correct one. The fact that mainly youngsters constitute the population of Timor-Leste is a guarantee for the Social Security System’s sustainability. “The age pyramid in Timor-Leste is different from the majority of the countries that are being studied. In Timor-Leste there are more youngsters than elders. For example, the 500 employees, police and military, that have already reached the retirement age, but that are still working, those will be the first to receive. But because there will be 30 000 contributing and 500 receiving, there will be a surplus of money. The money can be invested”, explains Vítor da Costa.

The Secretary of State for Social Security also referred the experience of some countries where the inverse happens, or in other words, “where there are more elders than youngsters. In those cases, the workers’ contributions are not sufficient to cover the payments to the pensioners”. Although the Government has chosen the Distribution System, he is still studying the hypotheses of the existence of complementary systems, based on the capitalization technique that could give answer to the claims of some professionals groups.

For now, and according to the decision of the Council of Ministers, last August, the inter-ministerial working group should present concrete proposals until the end of the year, in what concerns the Social Security System for Timor-Leste and the adoption of a transition system for the public servants that are in the retirement age.