Licensed Substitute: Amendments To Pensions & Retirement Allowances – Employee Benefits & Compensation

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Our Affiliate, Fatima Alsayed expands on changes to guidelines of pensions and retirement allowances for presidency employees.

The principal laws governing the pensions and retirement allowances for presidency employees is Regulation No. (13) of 1975 (the “Regulation”). On the 18th of April 2022, the Shura Council along with the Council of Representatives issued amendments under Regulation No. (13) of 2022 (the “Amendments “or “Amended Regulation”) to the provisions of the Regulation. Its provisions current enhanced financial security for employees working throughout the public sector by regulating their rights within the course of an allowance after retirement.

Amended Definitions

Employee

Amendments contained in the Regulation have been made with the overarching intention of benefiting employees. Beforehand, the
employee was outlined as a Bahraini nationwide, between the ages of eighteen (18) and sixty (60) working as an employee throughout the public sector. The Amended Regulation not specifies the utmost age contained in the definition of an employee, barely solely particulars a minimal age of eighteen (18). An extra part was added under the equivalent definition specifying the time interval of employment just like eternal or non everlasting positions under specific or indefinite time interval contracts, receiving full or partial salaries with benefits.

Remaining Basic Wage

The last main wage is printed as a result of the wage given for the ultimate 5 years (versus being two years) earlier to the date of retirement divided by 12. Nonetheless, the place the scale of the employee’s service is decrease than 5 years, then the ultimate main wage shall be calculated based mostly totally on the frequent wage for the interval of employment .

Pension and Social Insurance coverage protection Fund

The Authorities Pension Fund established under the Regulation alongside the Frequent Group for Social Insurance coverage protection
(“GOSI”) established by the Social Insurance coverage protection Act promulgated by Decree Regulation No. (24) of 1976 have now been merged under one fund titled “Pension and Social Insurance coverage protection Fund“.

Continuity of Employment

Article 4 of the Regulation determines the strategy of calculating the size of the employee’s service for retirement. With the amendments enforced, a model new provision is added under the acknowledged article giving the employee the pliability to proceed working until sixty-five (65) years of age.

Employees Not Entitled to Retirement Allowance

Pursuant to Article 12, if the employee’s service is terminated for any goal and is not entitled to a retirement allowance under any laws or pension insurance coverage protection system, the employee could have the correct to proceed optionally throughout the retirement scheme in the event that they’ve an environment friendly time interval of service of a minimal of 5 years. A request shall be submitted to the GOSI in the middle of the primary 12 months following the termination and former to the settlement of the employee’s rights for retirement.

Authorities Contributions to Retirement Allowances

Considered one of many elementary changes added to the Regulation is the rise of the federal authorities’s contribution to the employee’s retirement allowance. Earlier to the modification, Article 11 of the Regulation provided that the federal authorities’s contribution to the retired employee’s wage was 14%. Nonetheless, following the amendments such proportion elevated to twenty%. This alteration will tremendously revenue authorities employees as it may well result in rising their entire retirement allowance.

Employees Rights to a Retirement Allowance

Article 13 of the Regulation breaks down the circumstances the place an employee has the correct to an allowance after retirement. The Amendments now entitle the employee to have a retirement allowance after twenty (20) years of service if any of the subsequent circumstances have been met: (i) the redundancy of the job throughout the sector; (ii) the dismissal of the employee by a non-disciplinary decision or a disciplinary/judicial decision; or (iii) pressured retirement.

Along with such Amendments, one different state of affairs was added permitting the employee to an allowance throughout the event the place the employee retires after fifteen (15) years of service, or after twenty (20) years of service with the requirement of reaching fifty (50) years of ages.

Concluding Remarks

The Amendments favor the pursuits of the employees throughout the Kingdom of Bahrain by regulating their rights to a additional superior retirement plan. Providing employees with such added benefits will enhance productiveness and can be the outcomes of a wave of retirement, subsequently opening job options to new graduates.

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