Early Retirement in Morocco: A How-To Guide

 

 

For early retirement with the CNSS, you need your employer's agreement. They must pay at least 250,000 DH to the fund. With the CIMR, early retirement can happen at 50, but you may lose up to 60% of your pension.

1-Early Retirement
Few employees retire early in Morocco. This is what the statistics from the two organizations managing private sector retirement show, the National Social Security Fund (CNSS) and the Moroccan Interprofessional Retirement Fund (CIMR). Employer refusal to pay contributions for the early retirement period, employee desire to remain active until the legal retirement age or beyond, or unfamiliarity with the process...the reasons are many. However, it can be very beneficial if you prepare in advance and negotiate well with your employer. Because, let's say it upfront, their agreement is necessary to stop working before 60 and claim a full pension.

2- Early Retirement with CNSS
Let's talk about early retirement with the CNSS, which in February 2006, modified its status by law 17-02 to allow its contributors to retire earlier.
First, an employee can only claim early retirement if they are at least 55 years old. They must also have contributed to the CNSS for at least 3,240 days, or about 10 and a half years. Also, the employee must have 54 days of contributions, continuous or discontinuous, during the six months preceding their retirement. And, as stated earlier, the employer's agreement is needed. The retirement application form, available from a CNSS agency, must be completed by both the company and the employee.
Once the fund receives the request, it simulates the one-time bonus the employer must pay, equivalent to the remaining period of work until age 60. This bonus is calculated based on the insured's age at pension liquidation and a scale set by the fund. The latter depends on the remaining period until the insured's 60th birthday, the pension paid at the date of liquidation, and a technical interest rate of 3.25%. For example, if an employee decides to retire at 55, the employer must pay at least 250,000 DH to the CNSS. The amount of the bonus to be paid is then submitted to the company, which must pay it in one lump sum to the CNSS. Finally, the employee applies for a pension from the fund, which will be paid from the month following the employer's payment of the bonus. Like a normal retirement, the pension is limited to 4,200 DH per month.


3- 39% Increased Contributions to Receive Your Full Retirement with CIMR
The CIMR allows its members to retire from age 50, provided they have contributed for at least 5 years. The pension will be affected by the number of years remaining until age 60 that are not worked. For example, the pension of someone who chooses to stop working at age 50 will be reduced by 60%. In other words, they will only receive 40% of the total points accumulated. If the employee retires at 55, they will receive only 72% of their pension, and if they choose to stop at 59, a pension equivalent to 93% of their points will be paid. For example, a person who has accumulated 4,000 points over 30 years of activity should receive a monthly pension at age 55 of 3,146 DH under the normal scheme, instead of 4,370 DH if they retire at 60.
However, the CIMR has a product called "retirement at 55 without anticipation." The goal is to "allow the insured to benefit from early retirement while keeping their points acquired throughout their working years and benefit from a pension almost equivalent to what they could have received at age 60," explains Fouad Guennouni Assimi, Deputy General Manager of the CIMR
This option is open to all types of members, regardless of age or contribution rate, without any condition regarding the number of members per company. However, it results in a 38.89% increase in the overall contribution. For example, if the monthly contribution to the CIMR is 1,000 DH per member, it will rise to nearly 1,389 DH. The advantage is that the employee can bear this increase alone, by asking their employer to deduct it from their gross salary if the employer does not wish to contribute with their employee to this option.

Even with this product, the pension received at age 55 may not reach 100% of the normal pension if retiring at 60. Because the benefit will be calculated based on the number of points acquired before joining the retirement at 55, which will be reduced due to early payment, plus the points acquired since adopting the retirement at 55 without anticipation option. But for a person who subscribed to this option from their first job, they will have a full pension at age 55. To use the same example above, if the employee subscribed at age 25 to the retirement at 55 without anticipation option, the CIMR will pay them, after 30 years of activity and 4,000 points accumulated, a monthly pension of 4,370 DH, their full entitlement, instead of 3,146 DH. But the CIMR offers another possibility to employees wishing to retire before the legal age, without any reduction. This is the buyback of past services. In other words, the member can convert their retirement points acquired before joining this option into retirement points at 55, knowing that the buyback amounts are tax-deductible.
Generally, whether for early retirement or normal retirement, a person who has not contributed to the CIMR for a certain number of years can contact the fund's services for a simulation of the number of points they could have accumulated if they had contributed from the start. The goal is to boost their pension, whether received early or not. The amount of this buyback is obtained by multiplying the reference salary of the year, for example 21.79 DH for 2013, by an age coefficient and the number of points to be bought back. Note that the evolution of the reference salary linearly follows that of the average salaries of members.
The point buyback option is also valid if the employer decides to increase the contribution rate to the CIMR or if the employee receives a bonus. The latter is thus converted into accumulated points until the member's retirement.


4- AMO Continues Even After Early Retirement
The increase in the contribution rate to the CIMR or the buyback of points is fiscally advantageous for both the employee and the employer. Indeed, all deductions for retirement contributions are tax deductible as corporate income tax for the employer and income tax for the employee.
Note that the CIMR merged the basic and supplementary retirement schemes in 2009, broadened the contribution rate base, and abolished salary caps for contributions.
Another important aspect: health coverage. Do employees benefit from health insurance even in case of early retirement? It depends on the scheme you subscribe to. While coverage continues after early retirement for an employee under AMO, under the same conditions, this is not necessarily the case for private mutuals. The extent of health coverage from insurance companies depends on the nature of the contract with the employer but also on the employee's negotiation with their company.

Ibtissam Benchanna.


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