Jobless fund not meant for pension hikes, says government

TDT | Manama

Email: mail@newsofbahrain.com

The government has urged Parliament to withdraw a bill that diverts unemployment insurance surpluses to fund annual pension increases, warning the move lacks actuarial backing and strays from the scheme’s purpose.

The draft amends Article 8 of the 2006 Unemployment Insurance Law to let the fund pay yearly pension rises under any retirement scheme until the civil and military funds return to surplus. The government says this would turn a short-term job safety net into an open-ended pension subsidy.

The unemployment fund, ring-fenced within the Pension and Social Insurance Fund, is financed by a 3% payroll contribution split equally between the government, employers, and workers. Its role, the memo stresses, is to support those who lose jobs involuntarily or seek work for the first time—not to underwrite long-term pension costs.

Citing the absence of actuarial studies, the memo warns the bill could deplete reserves meant for downturns, leading to payment delays or tighter eligibility later. It also notes that military pensioners do not contribute to the unemployment account and should not benefit from its surplus.

The Legislation and Legal Opinion Commission echoes the need for actuarial and technical review before expanding spending beyond unemployment coverage. The government asks MPs to revisit the bill in light of these financial and legal concerns.