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MPs are set to debate a series of landmark amendments to Bahrain’s pension and social insurance system, aimed at improving retirement benefits for citizens.
The legislative package includes amendments to three core pension laws – the 1975 Civil Servants Pension Law, the 1976 Military Pension Law, and the 1976 Social Insurance Law – with the goal of easing the financial burden on retirees while ensuring the long-term sustainability of the pension system.
The proposal, originally submitted by MPs, adjusts pension calculation methods, contribution rates, and retirement eligibility rules.
According to Parliament’s services committee chairman MP Mamdooh Al Saleh, the amendments ‘seek to reinforce social protection for citizens and guarantee a decent living for retirees who have served the nation faithfully’.
“These reforms are designed to balance two critical goals – supporting retirees amid rising living costs, and maintaining the financial health of the pension fund,” Mr Al Saleh said.
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Mr Al Saleh
“Our committee studied the proposals thoroughly, taking into account the views of the government and the Social Insurance Organisation to ensure that the changes are fair, realistic, and sustainable.”
Under the proposed amendments, the pensionable salary will be recalculated based on the average of the final years of service instead of the current five-year formula.
Other key revisions include:
- Reducing employee contribution rates from seven per cent to 6pc, while raising the government’s share from 20pc to 21pc.
- Easing qualification periods for pension eligibility in certain cases such as redundancy or non-disciplinary dismissal.
- Eliminating the requirement for employees to pay the full cost of additional ‘virtual service’ periods, making it easier to count these years towards retirement.
- Reorganising annual pension increases into a five-tier system that ensures smaller pensions receive higher percentage increases.
However, the government has expressed reservations, warning that the proposed measures could strain public finances and undermine recent reforms aimed at stabilising the pension fund.
The government recommended a comprehensive actuarial review before proceeding, noting that lowering employee contributions and increasing government payments could widen the fund’s deficit.
It also cautioned that changes might conflict with the 2022 Pension Reform Law and the 2020 Pension Funds Decree, both designed to ensure the system’s long-term viability.
The Social Insurance Organisation echoed these concerns, noting that annual pension increases alone would cost around BD26 million per year, benefiting more than 100,000 retirees.
Officials also warned that the combined impact of reduced contributions and extended life expectancy – now averaging up to 35 years post-retirement – could put ‘significant pressure’ on the fund.
Despite these concerns, MP Al Saleh affirmed that Parliament remains committed to protecting retirees’ welfare.
“We acknowledge the financial challenges, but we must also recognise the human side,” he said. “After decades of service, our retirees deserve stability and dignity. This law aims to achieve that balance.”
Parliament is also set to debate three royal decrees issued by His Majesty King Hamad during recess amending the 2014 Traffic Law, the 1976 Penal Code and the 2002 Criminal Procedures Law.
MPs will also take a vote on a proposal by Strategic Thinking Bloc member Dr Mariam Al Dhaen to instal dash cams in vehicles.
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