Bahrain - The pension funds need to undergo urgent reforms in order to be saved before it’s too late.
Social Insurance Organisation (SIO) chief executive Eman Al Murbati gave a presentation on the future of pension funds.
She was speaking at an event hosted by the National Communication Centre (NCC) as part of their ‘Conversations with a Government Official’ series.
Ms Al Murbati explained the changes made to the pension funds to extend their sustainability until 2086.
During a Zoom conference with the media yesterday, she presented statistics showing the increase in retirement and insurance expenditures against contributions over the past 10 years which showed that expenditures far outpaced the inflow.
“Achieving a balance between income from contributions and pension expenditures is key to achieving sustainability of the pension funds,” she said.
“An actuary assesses the long- and short-term state of the funds every three years and if they can fulfil their obligations to the people.“
In 2015, the actuary assessed that the public fund will last until 2028 and the private fund will last until 2034 with a BD7.5 billion shortfall but in the 2018 the actuary report showed that the public fund will only last until 2024 and the private fund will last until 2033 with a BD14.38bn shortfall.
“The funds are struggling to make their financial commitments for the near future which requires quick application of reforms; these reforms must be applied in one large batch instead of one at a time in order to make a difference,” said Ms Al Murbati.
The GDN reported last month that the actuary/risk assessment expert has set 10 urgent radical reforms to save the pension funds and improve their sustainability as they face mounting pressure due to the increasing number of retirees while contributions remain unchanged.
According to sources, the parliamentarians’ pension costs the state budget BD110 million, especially after squashing the pension fund for MPs and Shura Council members.Four out of 10 recommendations have already been passed in laws.
They consist of merging the public and private sector funds, halting annual pension increase, unless there is a surplus, and decoupling salaries and pensions.
Retirees are no longer allowed to receive more than one pension under different retirement and insurance systems, except for those entitled to pensions because of disability, work accidents or kinship.
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