Lebanon Businessnews News

Pension system law
is finally promulgated
Will not go into effect before two years
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Parliament has passed a law to establish a retirement pension system for life that will replace the existing end-of-service indemnity scheme of the National Social Security Fund (NSSF).

Pension values will be indexed to inflation and adjusted on a yearly basis.

The new system will be applied on those who start work for the first time and on employees who are 49 years old and younger whose existing end-of-service indemnity will be liquidated, according to Mohammad Karaki, Director General of the NSSF. Joining the new system is optional for those older than 49 years.

Employees covered by the NSSF can choose between two insurance coverage schemes, according to Karaki. The suitable one for people with low salaries and a relatively short period of NSSF coverage (15 to 25 years) is to get 55 to 80 percent of the minimum wage. Those who are paid higher salaries can get 1.33 percent for each year of subscription to the NSSF which is equivalent to 40 percent of their average salary if they have worked for 30 years and to 53 percent of their average salary if they have worked for 40 years.

The International Labour Organization (ILO), which has provided extensive technical support to the authorities regarding this law, said that the law aligns with international labor standards for social security. Lebanon was one of only two Arab countries without a scheme that protects workers with long-term benefits for retirement, death, and disability. According to ILO, even before the unprecedented crises that have hit the country since 2019, the end-of-service indemnity system fell short in providing protection in old age. “The value of these indemnities has plummeted as a result of the collapse of the Lebanese pound leaving those insured without any source of income and forcing many of them to continue working into old age,” ILO said.

This law, which has been approved 20 years after its initial proposal, involves radical changes in the governance of the NSSF.

If the government issues the implementation decrees quickly, this system will be put into effect within two years, according to Karaki. With this law and the lifetime health insurance coverage, Lebanon completes the social protection umbrella, he said.
Date Posted: Dec 18, 2023
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