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Professional associations play a pivotal role in establishing social justice and enhancing economic stability for their members. They represent the first line of defense for the rights of professionals, which works to regulate the profession, improves working conditions, and ensures a dignified standard of living for its members.
Among the most prominent tools associations use to achieve these goals are pension funds, a fundamental pillar of the social protection system. They provide regular income to association members upon retirement or in cases of disability or death, ensuring a decent standard of living after they retire.
The importance of pension funds is growing in light of economic transformations and risks associated with the labor market, particularly in areas experiencing professional fluctuations or high youth unemployment rates. In this context, maintaining the sustainability, efficiency, and fairness of these funds becomes a national responsibility that extends beyond the associations themselves, becoming part of the social and economic security of society as a whole.
However, in recent years in particular, pension funds in Jordanian professional associations , most notably the Engineers and Doctors´ Associations, have experienced several escalating crises, threatening the collapse of a fundamental pillar of social protection for hundreds of thousands of professionals. This crisis poses a structural challenge that goes beyond numbers and financial deficits, affecting the confidence of its members and raising fundamental questions about the effectiveness of association pension systems and their ability to continue to provide a decent life after retirement.
Although the circumstances of each association vary, the common denominators of structural and financial challenges highlight a broader flaw in Jordan’s occupational pension systems. This calls for in-depth analysis to find sustainable solutions that guarantee the rights of members and preserve the sustainability of these funds.
An Ongoing Crisis in the Engineers’ Fund
The Jordan Engineers Association’s Pension Fund is the largest in terms of the number of subscribers and liabilities, with approximately 171,000 engineers. According to the pension fund’s 2024 annual report, it is experiencing a worsening financial deficit, with the annual deficit rising from less than one million dinars in 2014 to more than 44 million dinars in 2023. Despite the implementation of a revised system in 2024 that helped reduce the deficit to 21.6 million dinars, the underlying problem remains.
The fund’s revenues come from social insurance revenues, investment income from the fund’s assets and properties, additional fees in accordance with the provisions of the law for the benefit of the Fund, amounts decided by the Central Authority to be transferred from the Association’s fund to the Social Insurance fund, and subsidies and grants approved by the Council of Ministers.
According to the data, the heavy reliance on new subscriptions, given the low number of new members and weak investments, leaves the fund in a fragile financial position, threatening its ability to meet its future obligations.
Another challenge facing the fund is the high unemployment rate among engineers, which reached 40% in 2022. This has prompted many young people to refrain from joining or paying contributions, fearing the loss of their rights in the future, given the lack of confidence in the fund’s resilience.
The investments of the Jordan Engineers Association’s Pension Fund face multiple challenges, most notably poor diversification and the absence of a balanced strategy between returns and risks. This has resulted in limited financial performance and increased the fund’s overall fragility. In an interview with Al Rai newspaper, Engineer Abdullah Ghosheh, President of the Jordan Engineers Association, confirmed that the association’s council is working to recalibrate investment mechanisms by studying the possibility of separating pension management from investment, similar to the Social Security Fund. He criticized previous policies that relied on selling assets such as land and real estate without a clear investment plan. These efforts are part of a comprehensive reform plan adopted by the association to address the fund’s crisis, through the formation of nine specialized working groups tasked with preparing realistic technical and financial recommendations to restructure the pension system and ensure its sustainability.
Deep-rooted imbalances in the Doctors’ fund
The situation is not much different in the Doctors Association Retirement Fund, which suffers from a cumulative deficit of nearly 28.6 million dinars until the end of 2024, amid a large gap between assets (310,000 dinars) and liabilities (46 million dinars).
Financial statements show that the fund has been unable to pay full retirement salaries to all beneficiaries for more than nine years, with disbursements limited to specific categories. The main causes of the crisis are challenges in financial planning and the inadequacy of some current retirement formulas to address the ongoing changes in subscription rates and expenses.
Both funds rely in part on mandatory subscriptions. However, in light of the worsening financial crises and delayed salary disbursements, this obligation has become questionable, especially with a large number of young doctors and engineers losing confidence in the sustainability of the funds.
According to estimates by the Doctors Association, the number of unemployed doctors reached approximately 4,000 in 2022, while between 2,500 and 3,000 doctors graduate annually. This makes mandatory membership an unbearable burden for new members in the absence of real guarantees.
Common challenges… and the necessity of building trust!
In the midst of this protracted financial crisis, the Engineers’ Pension Fund suffers from a clear weakness in diversifying its investments. Its investment decisions are concentrated in a limited range of sectors, depriving its portfolio of the necessary balance between returns and risks.
While most pension funds around the world tend to diversify their portfolios across multiple instruments to ensure stability and achieve sustainable returns, the Engineers’ Fund lacks this balanced approach, making it more vulnerable to market fluctuations and reducing its ability to meet its growing pension obligations in the long term.
The Doctors Pension Fund crisis reflects structural challenges that go beyond short-term financial pressures which include aspects related to the system’s design, and financing and management mechanisms. Without effective and preemptive reform measures, the likelihood of declining confidence among doctors, especially among the younger generation, remains, which could threaten the fund’s long-term sustainability.
Ultimately, there is an urgent need for comprehensive reform interventions based on transparency, enhanced governance, and the adoption of a more flexible and fair participatory model that balances the rights and obligations of doctors and engineers and rebuilds trust in the retirement system as an essential part of professional social protection.
The Need for Radical Reforms
In light of this complex reality, partial or cosmetic measures are no longer sufficient. Rather, it is imperative to move toward comprehensive and profound reform, including: transitioning to a more flexible system, such as a defined contribution or hybrid system; improving management efficiency and diversifying investments to reduce risks and maximize returns; reviewing legal subscription obligations and providing more attractive flexible models for contributors; redesigning pension formulas based on realistic actuarial principles; and finally, forming a national reform committee that includes unions, the government, and financial experts.
Regaining the confidence of young doctors and engineers is the crucial step to ensuring the sustainability of these funds. This can only be achieved through transparent procedures, active participation in decision-making, and genuine reforms that restore to these institutions their fundamental role in protecting the professional and social rights of their members.
