Parliamentarians hope to keep pension funds well oiled by channelling a big slice of any profits their way when oil prices in the market are booming.
A group of five MPs, led by Strategic Thinking Bloc spokesman Khalid Bu Onk, has submitted a draft law aimed at securing a sustainable financial lifeline for Bahrain’s Social Insurance Organisation (SIO). The proposal was formally presented yesterday to Speaker Ahmed Al Musallam.
The draft law seeks to redirect a portion of oil revenues to support the pension system, whose financial challenges in recent years have forced the suspension of retirees’ annual increases.
Under the proposed legislation, one US dollar would be deducted from state revenues for each exported barrel of crude oil priced above $40, and two dollars for every barrel priced above $80.
The deducted amounts would be transferred directly to the SIO to reinforce its resources and help restore the annual pension increment, the move’s supporters say.
Mr Bu Onk
Mr Bu Onk, the proposal’s first signatory, said the initiative stems from a duty to protect retirees who have ‘devoted decades of service to the nation’.
“The financial pressures on the pension fund are no secret and the suspension of annual increases has affected thousands of families,” he said.
“Linking part of our oil surpluses to the fund is both a moral and constitutional responsibility, in my opinion. When the state earns more from its natural resources, those who built the country should be the first to benefit.”
Mr Bu Onk stressed that the deduction mechanism would be designed to activate only when global oil prices increased, ensuring that the measure did not strain the state budget during low-price periods.
Mr Al Salloom
Co-signatory, the Bloc’s president and Parliament’s financial and economic affairs committee chairman, Ahmed Al Salloom, suggested that the proposal aligned with long-standing recommendations to create new, stable revenue channels for the pension system.
“The fund’s actuarial deficit has been building for years, and we must address it through structural, not temporary, solutions,” Mr Al Salloom said.
“By linking support to oil revenues, we create a predictable, counter-cyclical mechanism: when prices go up, so does the fund’s ability to meet obligations. This strengthens financial stability and brings us closer to reinstating retirees’ annual increases.”
He claims that while not all five signatories belong to the same parliamentary bloc, the proposal reflects a ‘broad national consensus rather than partisan alignment’.
The draft law consists of five articles:
• Article One establishes the oil-price-based deduction tiers.
• Article Two mandates the transfer of these amounts to the Pension and Social Security Fund.
• Article Three activates the law at the start of the fiscal year following its entry into force.
• Article Four tasks the Finance and National Economy Minister with issuing implementing decisions within three months.
• Article Five sets the effective date as the day following its publication in the Official Gazette.
The explanatory memorandum emphasises that the proposal aims to restore retirees’ annual increments, bolster financial sustainability and enhance the state’s social safety net in line with constitutional guarantees of social security.
The legislation has now been referred to the relevant committees for review.
mohammed@gdnmedia.bh
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