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Pensions rise proposal rejected

Bahrain News
Mon, 18 Apr 2016

Bahrain: A proposed blanket increase in Bahrainis’ pensions has been shot down for the second time by the Shura Council.

The idea was first approved by parliament in 2007, but it gathered dust at the Shura Council for nine years before the upper chamber rejected it last month.

Two weeks later parliament again approved the proposal, which involves amendments to three pension laws governing the private, public and security sectors.

However, it was vetoed again yesterday and will now be scrapped. 

Bahrainis’ pensions currently increase by three per cent every year, but MPs wanted to increase them by 7pc. 

Parliament and Shura Council Affairs Minister Ghanim Al Buainain had warned the Pension Fund Authority (PFA) was already strained and could face bankruptcy if the increase was approved.

“[If we approve the increase] we are putting the PFA in irreconcilable danger,” warned Shura Council chairman Ali Saleh Al Saleh.

“It is already 200pc down in terms of what it pays out compared with what contributions it takes from employers and employees.

“We are not against increased pensions, which could have been negotiated by MPs during debates on national budget over the past six years, but throwing it in like this – knowing the tight budget and available funds – makes it impossible to give it the go-ahead.

“We have to think about the future.”

Shura Council first vice-chairman Jamal Fakhro warned the PFA could still face bankruptcy even without any increase in pensions. 

“Even with PFA investment, it is in danger of going bankrupt,” he said.

“Equilibrium studies are being conducted every three years and the PFA is in a bad situation, anyone can visit their website to understand the situation.

“It all started in 1986 when employees’ contributions from monthly wages were slashed from 18pc to 12pc.

“When reinstated two decades later the damage was beyond repair.” 

However, Shura Council member Shaikh Adel Al Maawada – who served as an MP for 12 years – said he had heard the same warnings about the PFA’s bankruptcy before, but nothing happened.

“Equilibrium studies are like bad music that is reintroduced every time, but again without taste and they are just forecasts that never happen,” he said.

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