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A roadmap to extend the lifespan of Bahrain’s pension funds up to 2086 is now in place, revealed Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa.
Shaikh Salman, who is politically responsible for the Social Insurance Organisation (SIO), told MPs yesterday that blueprints for the extension to the fund’s existence would breathe new life into them despite earlier studies suggesting they may have only three years left before bankruptcy.
He added the 65-year – incidentally, a pensionable age in many countries – roadmap was a determined government move to ensure that order was restored and matters were placed on a prosperous track.
“The roadmap is a huge commitment from the government to protect the funds from going bankrupt at short notice and ensure the benefits of workers and pensioners remain in place,” said Shaikh Salman.
“There are several legislations that are with Parliament’s services committee, and others set to come, that we also need as a support mechanism. We will work together in co-operation to achieve our roadmap lifespan target of 2086 from the original bankruptcy estimate of three years.
“We have to accept there will be challenges, hurdles and more work to be done to achieve our set goals but all in all we have to work towards the continuity of the SIO.
“We merged both civil and private sector funds last year to produce more resources that would help us sail through any deficits and ensure a unified vision for the way forward. We now have the full picture to be able to deal with the existing situation and any future case scenarios.”
He said accusations that BD900 million was missing from the SIO were untrue.
“The BD900m amount is not missing and should we ever feel that the funds are being misused, squandered or robbed we will take serious action,” promised Shaikh Salman.
“We have taken action against an official in an SIO affiliate company in the past and referred the case to the Public Prosecution and no one will be spared action should they be found to be at fault. Not now, in future or ever.”
Shaikh Salman said there should be no speeches directed to the media without it focusing on the tasks at hand.
“We shouldn’t just focus on comments for the media and there should be focus to lifting the funds from the status they are in,” he added.
SIO board of directors chairman Mahmood Al Kooheji said that the monthly deficit between workers’ contributions and dispensed pension payments was around BD33m.
“We have a huge burden due to a deficit inheritance passed to us from the past in which workers’ contributions to the SIO were less than the pensions we dispense,” he said.
“This has to change with an increase in contributions whether through higher payments towards the funds or by having more employed and thus contributing.
“The SIO board has not received any bonus for several years and what we do is voluntary work towards serving the nation – previously our spending on employees was less than two per cent of our revenues and now it is less than one per cent.”
He said that the SIO was at a crossroads when he was appointed at the helm of the organisation. Then there was the stark choice of either continuing the 3pc annual increase to pensions or continuing to pay pensions.
“We were under heavy criticism because we decided that 3pc increase should stop but we never went to the media – as we believe that the livelihood of thousands of pensioners was our priority,” said Mr Al Kooheji.
“Concerns voiced by MPs were about matters before we were appointed as a board in November 2019 and were not under my watch. We will closely work hand-in-hand with Parliament on whatever recommendations that are referred to us.”
He said a specialised investment company, independent from the SIO but under it, has been formed to manage pension assets and funds.
SIO chief executive Eman Al Murbati said around 2,800 cases of employers not making contributions to the funds have been referred to the Public Prosecution.
“We are using administrative authorities to force payments and are working with the Labour Market Regulatory Authority (LMRA) and other parties concerned. If that doesn’t work the cases are taken to court.”
MPs unanimously approved 50 recommendations to extend the lifespan of pension funds in Bahrain and protect the welfare of workers and pensioners.
Thirty-eight recommendations will be now reviewed by the government, while 12 will be addressed using parliamentary tools.
This followed seven hours of debate during yesterday’s weekly session on the findings of a four-month probe into pension funds.
mohammed@gdn.com.bh
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