Bahrain has introduced a minimum contribution threshold for social insurance to strengthen the financial sustainability of the pension fund and address imbalances between contributions paid and pension benefits received.
The Shura Council was notified of Decree-Law No 44 of 2026, amending certain provisions of the Social Insurance Law, during its weekly session yesterday.
Issued by His Majesty King Hamad, the decree-law adds a new Article 19 bis to the Social Insurance Law of 1976, providing for contributions to be calculated according to a minimum wage determined by a Cabinet decision.
The measure applies to all insurance branches covering old age, disability and death from non-occupational causes, with the aim of ensuring proportionality between total contributions paid and the benefits due.
The new provision will apply to insured people registering for the first time after the law comes into force.
According to the explanatory memorandum, the amendment seeks to protect the pension fund from potential financial shortfalls and ensure it can meet its obligations to insured workers, pensioners and beneficiaries over the long term. It addresses a perceived imbalance arising from the existence of a minimum pension without a corresponding minimum contribution requirement.
The memorandum states that this situation could allow contributions to remain at low levels that are disproportionate to the pension benefits ultimately received, particularly where beneficiaries qualify for the minimum pension.
Establishing a minimum contribution threshold is intended to curb potential exploitation of the system, strengthen the relationship between insurance contributions and entitlements, and promote fairness between different categories of subscribers and successive generations.
The decree-law also introduces insurance options for Bahrainis working inside or outside the kingdom for employers not covered by the Social Insurance Law.
Eligible workers, except those already benefiting from the provisions of Law No 31 of 2005 on social insurance for Bahrainis working abroad and those in similar circumstances before the new law takes effect, may either join the existing overseas insurance scheme, with contributions calculated according to the new minimum threshold, or participate in a special insurance scheme to be regulated by a Cabinet decision.
“The amendment forms part of broader efforts to maintain the pension fund’s financial position amid changes in the number of contributors and retirees, as well as the level of future pension obligations,” said the Legislation and Legal Opinion Commission.
The GDN reported earlier that pension funds lifespan has been extended until 2034.
The original government measures to extend the lifespan of pension funds under the Social Insurance Organisation (SIO) up to 2086 have been scrapped following legislators’ concerns in 2024.
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