jordan pulse -

Mohammad Abdullah Al-Khataybeh
University of Jordan
Date: 6 August 2025
Source: Rum News

In recent weeks, public debate in Jordan has centered on the actuarial studies and proposed amendments to the Social Security Law. Central to the conversation is the issue of the Social Security Investment Fund’s (SSIF) substantial holdings in Jordanian government debt instruments, which some critics interpret as fiscal overreach into the fund's resources.

Before diving into the heart of the discussion, let us imagine what the financial statements of the SSIF would look like if we excluded its investments in government securities—Treasury bonds and bills—which currently amount to 9.83 billion JOD, or 57% of the fund’s total investment portfolio. Would the fund have achieved a net income of 591 million JOD by the end of H1 2025 without this category of investment?

This article presents three key justifications for the SSIF's holdings in government debt instruments:

1. Risk Management

Government bonds are considered low-risk or even risk-free assets depending on their maturities. Globally, they are foundational instruments in managing investment portfolios, providing stability and predictable returns. The SSIF’s allocation to such instruments aligns with global best practices for institutional investment management.

2. Yield Curve and Market Stabilization

By participating in public debt auctions, the SSIF contributes to national economic stability. Its involvement helps curb excessive interest rate demands by commercial banks and promotes competitiveness in government debt markets. This, in turn, positively influences lending rates across sectors—businesses and individuals alike—and supports the general budget by lowering the domestic debt service cost. Essentially, the SSIF's participation creates meaningful demand for these securities and serves the objectives of both fiscal and monetary policymakers.

3. Protecting Contributors and Supporting Social Stability

The government, through these securities, provides the SSIF with significant financial support while offering returns free from most taxation—unlike other institutional investors, who may pay up to 35% in income tax. This tax exemption can be viewed as an implicit governmental subsidy to both current and future social security beneficiaries, contributing to social stability and the sustainability of the fund.

Therefore, should we not recognize the government's forfeiture of potential tax revenue as a legitimate and strategic contribution to the SSIF? This unconditional form of support helps preserve the integrity and sustainability of one of Jordan’s most vital national institutions.

Final Note:

This article does not prescribe a fixed percentage or target allocation for SSIF investments in public debt. Rather, it aims to provide a balanced understanding of why such investments exist and how they can serve both national financial interests and long-term social security sustainability.