Parliament backs major amendments to pension laws

MORE than 95,000 Bahrainis are a step away from a six per cent rise in pensions, with the move awaiting approval from the Shura Council tomorrow.

Parliament yesterday backed major amendments to pension laws after a 10-hour marathon session.

A majority of MPs voted in favour of amendments carried out to the 1976 Social Insurance Law and the 1975 Civil Servants Wages and Pensions Law. One MP walked out prior to the vote.

Pensioners from both the public and private sectors will benefit from the decision.

An urgent amendment by MPs would also see the increase backdated to January 2021, with three per cent accorded to last year and three this year. In all, the maximum increase will, however, be capped at BD60.

MPs also voted to give an annual increase in pensions whenever there is a surplus. The annual 3pc increase had been suspended for more than two years following a shortage of funds.

They also voted to gradually increase monthly pension contributions until it reaches 27pc of the salary, with the individual contribution not exceeding 1pc.

Expatriate workers would be enrolled into the pension system and their end-of-service benefits will be paid by the Social Insurance Organisation.

The retirement age will officially remain 60. However, people can opt to work until 65 and their maximum pensions will be capped at 90 per cent of their salary, instead of the current 80pc.

Legislators and the government also decided to restore the right to buy ‘giveaway’ years to allow workers to take early retirement with the government making up the difference in financial obligations to the SIO.

Pensions will be calculated on an average salary from the final five years of employment.

MPs also took a retrospective vote to approve urgent reforms to pension rules issued by His Majesty King Hamad through a royal decree during National Assembly recess in 2020.

The amendments will be debated and voted on during an extraordinary Shura Council session tomorrow. If approved, it would be ratified by the King.

“The 6pc is an increase to pensions and not a one-off bonus,” said Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa, who is also politically responsible for the Social Insurance Organisation (SIO).

“The major amendments give us flexibility to work better. It will protect the funds from going bankrupt and even ensure pensioners continue to get their pay without disruption.”

He added that the reforms have gone a long way from those originally proposed by the government two years ago.

“We listened to MPs, whether it is through the numerous probes into funds or questions seeking information about our affairs,” said the minister.

“This helped us change our six core urgent reforms and come up with multiple solutions. The version we have now is much balanced and is not a huge burden for employers who will shoulder the increase in contributions as we reach 27pc monthly, with current employees only having to pay 1pc.”

He added that other major amendments to the 1976 BDF and Public Security Wages and Pensions Law were on the way to bring all pension-related laws on similar lines. There are currently 150,000 workers from both sectors registered at the SIO and the deficit alone in the government’s pension fund is more than BD14 billion.

The government had presented six reforms last year after projections showed the public pension fund would go bankrupt in 2024 and the private pension fund by 2033.

SIO board chairman Mahmood Al Kooheji responded to claims by MPs that an expert study report on pensions was classified top secret. He asserted that SIO board members and Parliament’s services committee were given copies of the report.

Source: https://www.gdnonline.com/Details/1038014/Parliament-backs-major-amendments-to-pension-laws