PENSIONS DEAL: Bahrainis are set to benefit from a one-off six per cent increase in pensions
BAHRAINIS are set to benefit from a one-off six per cent increase in pensions after a consensus was reached last night between legislators and the government.
The maximum increase will, however, be capped at BD60.
The decision follows a high-profile meeting between the government, Parliament and the Shura Council at the National Assembly Complex in Gudaibiya.
It was headed by Assembly and Parliament Speaker Fouzia Zainal, while Shura Council chairman Ali Saleh Al Saleh and Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa, who is also Social Insurance Organisation (SIO) chairman, and Parliament and Shura Council Affairs Minister Ghanim Al Buainain were present.
An agreement was also reached to gradually increase monthly pension contribution 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 SIO.
The retirement age will officially remain 60. However, people can opt to work until 65 and their maximum pensions will be capped at 90pc 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.
Authorities also agreed to an annual increase in pensions whenever there is a surplus. The annual 3pc pension increase has been suspended for more than two years following a shortage of funds.
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.
Ms Zainal said the reforms would ensure sustainability of the funds whilst also protecting the rights of pensioners and workers.
“We have worked together to reach a consensus on various issues to bolster Bahrain’s depleting pensions funds, without affecting the benefits,” said Ms Zainal.
“Issues had to be addressed through a national vision in which the funds remain strong while we have to continue serving current pensioners and those in future.”
Mr Al Saleh said the consensus reflects commitment towards protecting the country and people. “Multiple approaches were presented, but the most suitable were approved to overcome the challenges and ensure pensioners and pension continuity are not harmed.”
Shaikh Salman said the milestone achievement through consensus on the six core steps would ensure sustainability while protecting pension rights.
“Together and through tremendous efforts we have proven that we could achieve what’s good for the nation and people.”
The GDN has learnt that MPs will vote on the agreement during Tuesday’s session following its urgent inclusion by Ms Zainal while the Shura Council will decide at an extraordinary session on Thursday.
If approved by both chambers, the agreements will be ratified by His Majesty King Hamad. The one-off 6pc increase would be implemented immediately after the issuance of a decree.
