Bahraini pensioners in the private sector could soon be allowed to apply for a replacement (commutation) loan just two years after receiving their previous lump‑sum payment – bringing them in line with the timeframe currently granted to government employees.
Under the existing rules, private sector retirees must wait until their previous loan is fully repaid before becoming eligible for another.
The proposed legislation seeks to remove this restriction and establish parity in financial benefits and access for pensioners across both the private and public sectors.
A bill amending Article 144 of the Social Insurance Law to equalise private sector retirees with their public-sector counterparts in accessing the loans is set for debate during Parliament’s weekly session on Tuesday.
Replacement (commutation) loan refers to the process of pension commutation, which is the ability for a pensioner to receive a portion of their future monthly pension payments as a single, lump-sum amount. The cash thus received is paid for by a fixed reduction in their monthly pension for the rest of their life.
Services committee chairman MP Mamdooh Al Saleh said the change ‘corrects a long-standing disparity’.
“This amendment achieves fairness between private and public retirees, improves living standards, and supports the sustainability of the pension system through regulated returns,” he said.
Under the current framework, the timing for a new loan effectively depends on when the previous one is fully repaid, a condition the committee says disadvantages private-sector retirees compared to rules applicable to government and military pensioners under parallel laws.
The committee’s summary states three guiding principles behind the bill: equality, improving citizens’ livelihoods, and raising revenues for the Social Insurance Organisation through loan interest.
The government has formally agreed with the proposal, describing it as a balanced application of social justice and financial sustainability that strengthens confidence in the pension system and encourages long-term employment in the private sector.
“The proposed text aligns with corresponding provisions governing government and military pensions, reflecting the legislator’s direction to ensure equal insurance rights across retiree categories,” the government memorandum noted.
During its review, the services committee held three meetings, examined legal and economic opinions, and reviewed a comparative legal study.
Parliament’s legislative and legal affairs committee confirmed the bill’s constitutional soundness, while the financial and economic affairs committee said the reform would enhance retirees’ welfare and increase the SIO’s income. The committee sought updated actuarial and financial data from the organisation but said it had not received the requested information by the time the report was finalised.
Mr Al Saleh said the committee nonetheless proceeded after weighing the legal opinions, government support and the principle of parity.
“Retirees need flexible financial tools. By shortening the interval between commutation benefits, the bill offers a practical solution that respects sustainability while easing pressure on pensioners,” he said.
If approved by Parliament on Tuesday, the bill will move to the Shura Council.
Legislators say the amendment is a targeted, technical fix with tangible social impact – bringing private-sector retirees in line with public-sector rules and offering a more predictable path to financial relief without undermining pension fund stability.
MPs are also set to review and vote on a mutual taxation agreement with the Government of Jersey.
mohammed@gdnmedia.bh
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