## Pension Reform in Comoros ## Source details **Canonical URL:** [Pension Reform in Comoros](https://www.imf.org/-/media/files/publications/selected-issues-papers/2026/english/sipea2026015.pdf) ## Other formats - [Markdown version](/-/media/files/publications/selected-issues-papers/2026/english/sipea2026015.pdf.md) - [Structured JSON version](/-/media/files/publications/selected-issues-papers/2026/english/sipea2026015.pdf.json) --- ### Executive Summary - CRC (Caisse des Retraites des Comores) is the main public pension system and a key component of the formal safety net. - Mounting financial imbalances threaten CRC’s ability to meet benefit commitments, with particular vulnerability in the civil servants’ scheme. - Actuarial analyses (conducted with the ILO) quantify projected financing gaps and identify drivers of imbalance. - Even under the most comprehensive combination of parametric adjustments, the system is projected to continue requiring some level of transitional financing over the medium term. ### Context - Social protection coverage in Comoros was about 3 percent of the population covered by at least one branch of the social protection system in 2022, excluding health. - The 3 percent figure is below the 9.7 percent average for low-income countries (LIC). - Structural constraints on coverage: - Predominance of informal employment: estimated at 88 percent of the active population. - Regulatory gaps and limited coordination across institutions. - CRC provides income support to retirees and their families but faces sustainability challenges exacerbated by demographic trends and weak governance. - The paper quantifies CRC’s projected financing gap and examines parametric reform scenarios via actuarial simulations. ### Pension System Structure and Key Parameters - CRC administers three defined-benefit schemes: Civil servants; Non-civil servants (including private sector employees and non-civil servant public workers); Members of Parliament (MPs). - Operates de facto on a pay-as-you-go (PAYG) basis with no accumulated reserves and informal cross-financing across schemes. - Participation mandatory for formal sector workers; contributions shared between employers and employees. - Key statutory parameters: - Civil Servants: Contribution Rate 17% (12% employer, 5% employee); Statutory Retirement Age 55–65 (category-dependent); Minimum Contribution Period 15 years; Benefit Formula 2% × years of service × last 6 months’ average salary. - Non-Civil Servants: Contribution Rate 8% (5% employer, 3% employee); Statutory Retirement Age 55–65 (category-dependent); Minimum Contribution Period 15 years; Benefit Formula 1.33% × years of service × last 6 months’ average salary. - Members of Parliament: Contribution Rate 26% (10% employer, 16% employee); Statutory Retirement Age 55; Minimum Contribution Period 5 years; Benefit Formula 5% × years of service × final parliamentary indemnity. - Structural weakness: short salary reference period (average of the last six months) inflates pension liabilities relative to the contribution base. - Demographics: - Civil servants’ scheme demographic ratio: fell from 4.1 in 2020 to 2.9 in 2024. - System-wide demographic ratio projected to fall from 2.9 in 2024 to 1.6 by 2035. - Drivers of adverse demographic trend: - Stagnant contributory base, constrained by public sector hiring freezes. - Low enforcement of mandatory registration and weak compliance among non-civil servants. - Rising life expectancy lengthening retirement duration. - Declining fertility rates increasing demographic dependency. - Main technical parameters (retirement age, minimum length of service, accrual rate) have remained unchanged. ### Methodology - Analysis based on a financial sustainability study requested by Comorian authorities; full report (“Report to the Comoros Pension Fund – Sustainability Study”, ILO, forthcoming) submitted to authorities. - Data collection: targeted CRC requests, field visits, technical exchanges. - Significant administrative data gaps required substantial data reconstruction using best-estimated assumptions; supplementary data from the Ministry of Civil Service used. - Scheme-by-scheme approach before consolidation: - Civil servants’ scheme: cohort-based projection using ILO actuarial modelling tool. - MPs and non-civil servants: projections based on aggregate assumptions calibrated to recent financial flows. - Results are indicative estimates; key recommendations include improving data quality (individual member records), conducting external audits of financial statements, and strengthening monitoring of pension indicators. ### Financial Assessment and Short-Term Outlook - CRC’s financial position deteriorated, creating significant liquidity pressures and sustainability risks. - 2024 system deficit: over KMF 118 million (expenditures exceed ordinary contribution revenues). - Legal average contribution rate broadly stable while PAYG required rate rose steadily and surpassed the legal rate in 2022. - Since 2022, ordinary contributions no longer suffice to meet annual obligations, causing liquidity shortfalls and pension payment delays. - Exceptional and temporary supports mobilized: - Increase in civil servants’ contribution rate from 14 percent to 17 percent in January 2025. - Gradual clearance of government’s past unpaid contribution arrears via monthly transfers of KMF 60 million beginning in 2023, with outstanding payments expected to continue until 2029. - Ad-hoc budget support: two large disbursements of KMF 548 million in 2022 and KMF 527 million in 2024 to cover pension payments to civil servants and MPs. - Without exceptional measures, CRC’s annual deficit would have exceeded KMF 1.3 billion in 2024. - Scheme-level 2024 performance: - Non-civil servants’ scheme: generating a surplus. - Civil servants’ scheme: deficit of KMF 274 million in 2024 (theoretical figure); without exceptional state support, shortfall would have been over KMF 1.4 billion in 2024. - MPs’ scheme: deficit of KMF 69 million in 2024. - Required PAYG contribution rates (2024): - Civil servants’ scheme: nearly 22 percent of salaries versus 14 percent legal rate in effect during the period. - MPs’ scheme: required rate exceeded 75 percent versus 26 percent legal rate. - Arrears currently estimated at nearly KMF 2 billion. ### Actuarial Projections — System-wide and Scheme Drivers (2025–2035) - Projection horizon: 2025–2035; baseline assumes no policy changes, stable contributor base, rising pensioners. - System-wide baseline: - Nearly balanced in 2025 (due to arrears clearance and non-civil servants’ surplus) but annual deficit expected to exceed KMF 4.8 billion by 2035. - Cumulative financing requirement over 2025–2035 projected at over KMF 25.2 billion (excluding interest). - Civil servants’ scheme: - Contributors-to-pensioners ratio declines from 3.8 in 2025 to 2.2 by 2035. - Annual deficit increases from KMF 364 million in 2025 to KMF 4.6 billion by 2035. - Cumulative financing needs reach KMF 26.6 billion over 2025–2035. - PAYG required contribution rate projected to rise from 22.5 percent in 2025 to nearly 38 percent by 2035 (statutory rate is 17 percent). - MPs’ scheme: - Fewer than 35 active MPs depending on the legislature. - Annual deficit projected to grow from KMF 86 million in 2025 to nearly KMF 290 million by 2035. - By 2035 the MPs’ scheme accounts for less than 6 percent of CRC’s total projected financing gap. - Non-civil servants’ scheme: - Currently in surplus under baseline with statutory contribution rate of 8 percent generating a cumulative surplus over the projection horizon. - Surplus is fragile and could be rapidly eroded by demographic or economic deterioration, slower formal job creation, or declining contribution compliance. ### Reform Options and Quantified Impacts (Civil Servants’ Scheme Focus) - Simulations use ILO-Pension model and scheme-level data; reforms assessed individually and in combined packages. - Contribution rate scenarios (civil servants statutory rate): - Baseline statutory rate: 17 percent. - Raising statutory rate to 23 percent by 2035 lowers cumulative financing need from KMF 26.6 billion to KMF 13.8 billion. - Even with higher statutory rates, PAYG required contribution remains above statutory rates (nearly 38 percent by 2035 in baseline). - Accrual rate adjustments (prospective, preserve acquired rights): - Current accrual rate: 2 percent. - Reducing accrual to 1.75 or 1.33 percent (1.33 percent aligns with ILO Convention 102 minimum) yields gradual gains. - Lowering accrual to 1.33 percent reduces cumulative financing need from KMF 26.6 billion to KMF 24.9 billion by 2035. - Salary reference period extension: - Current reference period: last six months. - Gradually extending to 60 months reduces cumulative financing need by KMF 2.5 billion by 2035. - Minimum retirement age increase: - Baseline minimum retirement age: 55 years. - Reform scenario: gradual increase of six months per year starting in 2026 to reach 60 years by 2035. - Cumulative financing need declines from KMF 26.6 billion to KMF 25.1 billion by 2035. - Combined reform packages: - Package 3 (most ambitious) includes, among others, 2-percentage points annual increase in population coverage and accrual rate aligned with ILO minimum. - Package 3 reduces cumulative financing need by over 90 percent, from KMF 26.6 billion to KMF 2.5 billion by 2035. - Under Package 3, PAYG required contribution rate stabilizes near 28 percent by 2035 (compared with nearly 38 percent in baseline). - Even Package 3 does not fully eliminate transitional financing needs through 2035. - MPs’ scheme simulations: - Baseline statutory contribution rate for MPs: 26 percent. - Increasing to 44 percent fails to remove the structural deficit. - Structural solutions considered: transition to budgetary financing or integration under the civil servants’ regime with differentiated parameters. - Non-civil servants’ sensitivities: - Baseline statutory contribution rate: 8 percent produces a cumulative surplus under current assumptions. - Surplus depends on maintaining coverage expansion and contribution recovery; risks could quickly erode surplus. ### Reform Scenarios (Annex Table 1 summary) - Baseline: Population Growth 0.00; Contribution Rate 17.00; Accrual Rate 2; Reference Salary (months) 6; Minimum Retirement Age (years) 55. - Package 1: Population Growth 1.00; Contribution Rate 19.00; Accrual Rate 1.75; Reference Salary (months) 36; Minimum Retirement Age (years) 60. - Package 2: Population Growth 2.00; Contribution Rate 21.00; Accrual Rate 1.5; Reference Salary (months) 36; Minimum Retirement Age (years) 60. - Package 3: Population Growth 2.00; Contribution Rate 23.00; Accrual Rate 1.33; Reference Salary (months) 60; Minimum Retirement Age (years) 60. ### Policy Recommendations and Implementation Priorities - Tailored reforms by scheme: - Civil servants’ scheme: prioritize a coherent package of parametric reforms—minimum retirement age, wage reference period, accrual rates—applied prospectively and phased to protect social stability and accrued rights. - MPs’ scheme: require explicit political decision on financing—options include dedicated funding, integration into another scheme, or specific budget allocation. - Non-civil servants’ scheme: strengthen contribution collection and active membership; address payment collection weaknesses in the private sector; reduce arrears (currently nearly KMF 2 billion). - Formalize and clarify financing and transfers: - Formalize budget transfers and establish a clear request mechanism integrated into the Fund’s budget process to stabilize cash flows and predictability. - Institute separate and transparent accounting for each scheme to identify financing needs and allow targeted parameter adjustments. - Governance, administrative, and legal reforms: - Strengthen contribution collection, oversight, and compliance mechanisms. - Modernize administration and digitize information systems; prepare regular official, audited financial statements for transparency and actuarial monitoring. - Revise the legal framework to clarify institutional responsibilities, embed parametric adjustments, and provide a durable framework for financing mechanisms. - Stakeholder engagement and political commitment: - Conduct tripartite dialogue (government, employers, employee representatives) to build consensus and legitimacy for reforms. - Secure strong political and institutional commitment to implement technical recommendations and sustain reforms. ### Concluding Remarks - The civil servants’ scheme drives most medium-term financing requirements; the MPs’ scheme is structurally unsustainable; the non-civil servants’ scheme’s surplus is used to mask wider imbalances and is vulnerable. - A combination of parametric reforms, institutional strengthening, formalized financing, and political buy-in is required to stabilize CRC and support broader social protection and state modernization objectives. - Even under ambitious reform packages, some residual financing need remains through at least 2035, underscoring the need for complementary transitional financing and governance improvements. *Source: sipea2026015 - 17. The CRC’s consolidated financial management masks a system of informal cross-* ### 2026. This paper is also published separately as IMF Country Report No 26/48. ### Pension Reform in Comoros ### Executive Summary - The CRC (Caisse des Retraites des Comores) is the main public pension system in Comoros and a key component of the formal safety net. - Mounting financial imbalances threaten the CRC’s ability to meet benefit commitments, with particular vulnerability in the civil servants’ scheme. - Actuarial analyses (conducted with the ILO) quantify projected financing gaps and identify drivers of imbalance. - Even under the most comprehensive combination of parametric adjustments, the system is projected to continue requiring some level of transitional financing over the medium term. ### Context - Social protection coverage in Comoros is limited: only about 3 percent of the population was covered by at least one branch of the social protection system in 2022, excluding health. - This 3 percent figure is well below the 9.7 percent average for low-income countries (LIC). - Structural factors constraining coverage include: - Predominance of informal employment, estimated at 88 percent of the active population. - Regulatory gaps and limited coordination across institutions. - The CRC provides income support to retirees and their families but faces sustainability challenges exacerbated by demographic trends and weak governance. - The paper quantifies the CRC’s projected financing gap and examines parametric reform scenarios via actuarial simulations. ### The Pension System’s Structure and Challenges - The CRC administers three defined-benefit schemes: - Civil servants - Non-civil servants (including private sector employees and non-civil servant public workers) - Members of Parliament (MPs) - System features: - Operates de facto on a pay-as-you-go (PAYG) basis with no accumulated reserves and cross-financing practices. - Participation is mandatory for formal sector workers; contributions are shared between employers and employees. - Key statutory parameters (as presented): - Civil Servants: Contribution Rate 17% (12% employer, 5% employee); Statutory Retirement Age 55–65 (category-dependent); Minimum Contribution Period 15 years; Benefit Formula 2% × years of service × last 6 months’ average salary. - Non-Civil Servants: Contribution Rate 8% (5% employer, 3% employee); Statutory Retirement Age 55–65 (category-dependent); Minimum Contribution Period 15 years; Benefit Formula 1.33% × years of service × last 6 months’ average salary. - Members of Parliament: Contribution Rate 26% (10% employer, 16% employee); Statutory Retirement Age 55; Minimum Contribution Period 5 years; Benefit Formula 5% × years of service × final parliamentary indemnity. - A common structural weakness: short salary reference period (average of the last six months) inflates pension liabilities relative to the contribution base. - Demographic deterioration: - Civil servants’ scheme demographic ratio fell from 4.1 in 2020 to 2.9 in 2024. - System-wide demographic ratio projected to fall from 2.9 in 2024 to 1.6 by 2035. - Drivers of adverse demographic trend: - Stagnant contributory base, constrained by public sector hiring freezes. - Low enforcement of mandatory registration and weak compliance among non-civil servants. - Rising life expectancy increasing retirement duration. - Declining fertility rates increasing demographic dependency. - Despite these trends, main technical parameters (retirement age, minimum length of service, accrual rate) have remained unchanged. ### Methodology - Analysis based on a financial sustainability study requested by Comorian authorities; a full report (“Report to the Comoros Pension Fund – Sustainability Study”, ILO, forthcoming) was submitted to authorities. - Data collection involved targeted CRC requests, field visits, and technical exchanges. - Significant administrative data gaps required substantial data reconstruction using best-estimated assumptions; supplementary data from the Ministry of Civil Service were used. - A scheme-by-scheme approach was used before consolidation: - Civil servants’ scheme: cohort-based projection using ILO actuarial modelling tool. - MPs and non-civil servants: projections based on aggregate assumptions calibrated to recent financial flows. - Results are indicative estimates; key recommendations include improving data quality (individual member records), conducting external audits of financial statements, and strengthening monitoring of pension indicators. ### Financial Assessment and Outlook - CRC’s financial position has deteriorated, creating significant liquidity pressures and sustainability risks. - 2024 system deficit: over KMF 118 million (expenditures exceed ordinary contribution revenues). - The legal average contribution rate has remained broadly stable while the PAYG required rate rose steadily and surpassed the legal rate in 2022. - Since 2022, ordinary contributions no longer suffice to meet annual obligations, causing liquidity shortfalls and pension payment delays. - Exceptional and temporary supports mobilized to meet obligations: - Increase in civil servants’ contribution rate from 14 percent to 17 percent in January 2025. - Gradual clearance of government’s past unpaid contribution arrears via monthly transfers of KMF 60 million beginning in 2023, with outstanding payments expected to continue until 2029. - Ad-hoc budget support: two large disbursements of KMF 548 million in 2022 and KMF 527 million in 2024 to cover pension payments to civil servants and MPs. - Without exceptional measures, CRC’s annual deficit would have exceeded KMF 1.3 billion in 2024. - Scheme-level performance: - Non-civil servants’ scheme: generating a surplus. - Civil servants’ scheme: deficit of KMF 274 million in 2024 (theoretical figure); without exceptional state support, shortfall would have been over KMF 1.4 billion in 2024. - MPs’ scheme: deficit of KMF 69 million in 2024. - Required PAYG contribution rates (2024): - Civil servants’ scheme: nearly 22 percent of salaries versus 14 percent legal rate in effect during the period. - MPs’ scheme: required rate exceeded 75 percent versus 26 percent legal rate. *Source: IMF Selected Issues Paper (SIP/2026/015), “Pension Reform in Comoros”, prepared by Mehdi El-Herradi, Martin Blumhart, Moustapha Diouf, and Jasmina Papa; finalized January 27, 2026.* ### 17. The CRC’s consolidated financial management masks a system of informal cross- ### 17. The CRC’s consolidated financial management masks a system of informal cross- ### Key findings and system-wide outlook - The Fund’s consolidated accounting conceals informal cross-subsidization: surpluses from the non-civil servants’ scheme are used to partially offset large deficits in the civil servants’ and MPs’ schemes. - This cross-financing is not legally embedded and prevents the non-civil servants’ scheme from building reserves for its eventual maturity. - The non-civil servants’ surplus has reached its limit and is no longer sufficient to offset rising deficits in the other schemes; continued reliance on these diminishing surpluses is expected to further exacerbate the CRC’s overall financing gap. - System-wide projections (baseline, no policy change) show: - System nearly balanced in 2025 (due to arrears clearance and non-civil servants’ surplus) but annual deficit expected to exceed KMF 4.8 billion by 2035. - Cumulative financing requirement over 2025–2035 projected at over KMF 25.2 billion (excluding interest). - Arrears are currently estimated at nearly KMF 2 billion. ### Actuarial projections — drivers and scheme-specific results - Projection horizon: 2025–2035; baseline assumes no policy changes, stable contributor base, rising pensioners. - Civil servants’ scheme: - Contributors-to-pensioners ratio declines from 3.8 in 2025 to 2.2 by 2035. - Annual deficit increases from KMF 364 million in 2025 to KMF 4.6 billion by 2035. - Cumulative financing needs reach KMF 26.6 billion over 2025–2035. - PAYG required contribution rate projected to rise from 22.5 percent in 2025 to nearly 38 percent by 2035 (statutory rate is 17 percent). - MPs’ scheme: - Very limited contributor base—fewer than 35 active MPs depending on the legislature. - Annual deficit projected to grow from KMF 86 million in 2025 to nearly KMF 290 million by 2035. - By 2035 the MPs’ scheme accounts for less than 6 percent of the CRC’s total projected financing gap but contributes materially to system vulnerability. - Non-civil servants’ scheme: - Currently in surplus under baseline with statutory contribution rate of 8 percent generating a cumulative surplus over the projection horizon. - Surplus is fragile: demographic or economic deterioration, slower formal job creation, or declining contribution compliance could rapidly erode it. ### Reform options and quantified impacts (civil servants’ scheme focus) - Simulations use the ILO-Pension model and scheme-level data; reform impact assessed individually and in combined packages. - Contribution rate increases (statutory rate scenarios for civil servants): - Baseline statutory rate: 17 percent. - Raising statutory rate to 23 percent by 2035 lowers cumulative financing need from KMF 26.6 billion to KMF 13.8 billion. - Even with higher statutory rates, the PAYG required contribution remains well above statutory rates (reaching 38 percent by 2035 in baseline). - Accrual rate adjustments (apply prospectively, preserve acquired rights): - Current accrual rate: 2 percent. - Reducing accrual rate to 1.75 or 1.33 percent (1.33 percent aligns with ILO Convention 102 minimum) yields gradual gains. - Lowering accrual to 1.33 percent reduces cumulative financing need from KMF 26.6 billion to KMF 24.9 billion by 2035. - Salary reference period extension: - Current reference period: last six months. - Gradually extending to 60 months reduces cumulative financing need by KMF 2.5 billion by 2035. - Minimum retirement age increase: - Baseline minimum retirement age: 55 years. - Reform scenario: gradual increase of six months per year starting in 2026 to reach 60 years by 2035. - Cumulative financing need declines from KMF 26.6 billion to KMF 25.1 billion by 2035. - Combined reform packages (assumptions summarized in Annex Table 1): - Package 3 (most ambitious): includes, among others, 2-percentage points annual increase in population coverage and accrual rate aligned with ILO minimum. - Package 3 reduces cumulative financing need by over 90 percent, from KMF 26.6 billion to KMF 2.5 billion by 2035. - Under Package 3, PAYG required contribution rate stabilizes near 28 percent by 2035 (compared with nearly 38 percent in baseline). - Even the most ambitious package does not fully eliminate transitional financing needs through 2035. - MPs’ scheme reform simulations: - Baseline statutory contribution rate for MPs: 26 percent. - Even increasing to 44 percent fails to remove the structural deficit. - Structural solutions considered: transition to budgetary financing or integration under the civil servants’ regime with differentiated parameters. - Non-civil servants’ scheme sensitivities: - Baseline statutory contribution rate: 8 percent produces a cumulative surplus under current assumptions. - Surplus depends on maintaining coverage expansion and contribution recovery; risks could quickly erode surplus. ### Reform scenarios summary (from Annex Table 1) - Baseline: Population Growth 0.00; Contribution Rate 17.00; Accrual Rate 2; Reference Salary (months) 6; Minimum Retirement Age (years) 55. - Package 1: Population Growth 1.00; Contribution Rate 19.00; Accrual Rate 1.75; Reference Salary (months) 36; Minimum Retirement Age (years) 60. - Package 2: Population Growth 2.00; Contribution Rate 21.00; Accrual Rate 1.5; Reference Salary (months) 36; Minimum Retirement Age (years) 60. - Package 3: Population Growth 2.00; Contribution Rate 23.00; Accrual Rate 1.33; Reference Salary (months) 60; Minimum Retirement Age (years) 60. ### Policy recommendations and implementation priorities - Tailored reforms by scheme: - Civil servants’ scheme: prioritize a coherent package of parametric reforms—minimum retirement age, wage reference period, accrual rates—applied prospectively and phased to protect social stability and accrued rights. - MPs’ scheme: require explicit political decision on financing—options include dedicated funding, integration into another scheme, or specific budget allocation. - Non-civil servants’ scheme: strengthen contribution collection and active membership; address payment collection weaknesses in the private sector; reduce arrears (currently nearly KMF 2 billion). - Formalize and clarify financing and transfers: - Formalize budget transfers and establish a clear request mechanism integrated into the Fund’s budget process to stabilize cash flows and predictability. - Institute separate and transparent accounting for each scheme to identify financing needs and allow targeted parameter adjustments. - Governance, administrative, and legal reforms: - Strengthen contribution collection, oversight, and compliance mechanisms. - Modernize administration and digitize information systems; prepare regular official, audited financial statements for transparency and actuarial monitoring. - Revise the legal framework to clarify institutional responsibilities, embed parametric adjustments, and provide a durable framework for financing mechanisms. - Stakeholder engagement and political commitment: - Conduct tripartite dialogue (government, employers, employee representatives) to build consensus and legitimacy for reforms. - Secure strong political and institutional commitment to implement technical recommendations and sustain reforms. ### Concluding remarks - The civil servants’ scheme drives most medium-term financing requirements; the MPs’ scheme is structurally unsustainable; the non-civil servants’ scheme’s surplus is used to mask wider imbalances and is vulnerable. - A combination of parametric reforms, institutional strengthening, formalized financing, and political buy-in is required to stabilize the CRC and support broader social protection and state modernization objectives. - Even under ambitious reform packages, some residual financing need remains through at least 2035, underscoring the need for complementary transitional financing and governance improvements. *Source: sipea2026015 - 17. The CRC’s consolidated financial management masks a system of informal cross-* --- _Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2026/english/sipea2026015.pdf_