The Lebanese Parliament passed a law on Thursday that establishes a comprehensive pension system for private sector workers and fundamentally reshapes the governance of the National Social Security Fund (NSSF). The International Labor Organization (ILO), which provided extensive technical support to this project, described it as “one of the most significant socioeconomic reforms witnessed by Lebanon in the past thirty years.”
In a statement issued on Friday, the ILO said: “For thirty years, various attempts have been made to replace Lebanon’s end-of-service indemnity system with a more modern pension scheme, but they have all failed until now. Lebanon was one of only two countries in the Arab region without a scheme that provides insured workers with long-term benefits for retirement, death and disability. However, this has recently changed with a new milestone achievement.”
It explained that “the new pension benefits will be calculated, taking into account two guaranteed minimum amounts: the first is 80 percent of the minimum wage after 30 years of contribution, and the second is 1.33 percent for each year of the insured’s revalorized average wage. Benefits will be paid in case of disability and will be transferred to survivors in case of the death of the insured member or the pensioner. Pension values will also be indexed to inflation through a yearly adjustment process.”
The ILO Regional Director for the Arab States, Ruba Jaradat, stated: “At a time of unprecedented social and economic crises, Lebanon shows that advancing structural reforms is possible and at the same time unavoidable. Stronger public social protection mechanisms and better-functioning national institutions are critical to ensuring that economic recovery is also accompanied by the advancement of social justice.”
The former Minister of Economy and Trade, Nicolas Nahas, who headed the parliamentary subcommittee that revised and finalized the project of the law in the past legislature, considers this a major milestone for Lebanon. “We have pursued this transformative legislation for years and are elated to witness its approval today. It marks a crucial step forward for our country given the benefit it will bring to both workers and employers.”
MP Bilal Abdallah, head of the Parliamentary Committee on Health, Labor and Social Affairs, said, “Tailored to the unique Lebanese context and realities, the law strikes a delicate balance between redistribution and capitalization, and streamlines the fund’s management and investment, ensuring the sustainability of its benefits.”
Furthermore, the law introduces an entirely new governance structure for the NSSF. The current board of directors will be replaced by a smaller board of ten members, four representing workers, four representing employers, and two representing the government. Notably, six of the members will be required to be specialized experts on matters of social protection. Overseeing the funds will be an independent committee of investment, comprised of specialized experts, along with a dedicated investment arm. The NSSF is also mandated to institute a system for the electronic payment of contributions and benefits, and a digital platform for workers and employers to access information on their social security rights.
In his remarks, Bchara el Asmar, the head of the General Confederation of Workers (CGTL), deems this law “a fundamental turning point in the interests of the insured, serving as a guarantee for the continuity of salary post-retirement.”
“The new system will improve the well-being of Lebanese who reach retirement age and strengthen social solidarity, which is very important for Lebanon these days,” said Luca Pellerano, Senior Social Protection Specialist who has led technical engagement on the project from the ILO Regional office in Beirut. “This has fundamental importance, not only for reducing social vulnerabilities but also for ensuring the proper functioning of the entire social security system. The new law should encourage employers to declare full salaries to the NSSF, from which other branches of the system - most importantly the health insurance branch - will in turn benefit.”
The ILO will now shift its focus towards supporting the NSSF and social partners in its successful and timely implementation - the next significant challenge in this endeavor, according to the statement.
In a statement issued on Friday, the ILO said: “For thirty years, various attempts have been made to replace Lebanon’s end-of-service indemnity system with a more modern pension scheme, but they have all failed until now. Lebanon was one of only two countries in the Arab region without a scheme that provides insured workers with long-term benefits for retirement, death and disability. However, this has recently changed with a new milestone achievement.”
It explained that “the new pension benefits will be calculated, taking into account two guaranteed minimum amounts: the first is 80 percent of the minimum wage after 30 years of contribution, and the second is 1.33 percent for each year of the insured’s revalorized average wage. Benefits will be paid in case of disability and will be transferred to survivors in case of the death of the insured member or the pensioner. Pension values will also be indexed to inflation through a yearly adjustment process.”
The ILO Regional Director for the Arab States, Ruba Jaradat, stated: “At a time of unprecedented social and economic crises, Lebanon shows that advancing structural reforms is possible and at the same time unavoidable. Stronger public social protection mechanisms and better-functioning national institutions are critical to ensuring that economic recovery is also accompanied by the advancement of social justice.”
The former Minister of Economy and Trade, Nicolas Nahas, who headed the parliamentary subcommittee that revised and finalized the project of the law in the past legislature, considers this a major milestone for Lebanon. “We have pursued this transformative legislation for years and are elated to witness its approval today. It marks a crucial step forward for our country given the benefit it will bring to both workers and employers.”
MP Bilal Abdallah, head of the Parliamentary Committee on Health, Labor and Social Affairs, said, “Tailored to the unique Lebanese context and realities, the law strikes a delicate balance between redistribution and capitalization, and streamlines the fund’s management and investment, ensuring the sustainability of its benefits.”
Furthermore, the law introduces an entirely new governance structure for the NSSF. The current board of directors will be replaced by a smaller board of ten members, four representing workers, four representing employers, and two representing the government. Notably, six of the members will be required to be specialized experts on matters of social protection. Overseeing the funds will be an independent committee of investment, comprised of specialized experts, along with a dedicated investment arm. The NSSF is also mandated to institute a system for the electronic payment of contributions and benefits, and a digital platform for workers and employers to access information on their social security rights.
In his remarks, Bchara el Asmar, the head of the General Confederation of Workers (CGTL), deems this law “a fundamental turning point in the interests of the insured, serving as a guarantee for the continuity of salary post-retirement.”
“The new system will improve the well-being of Lebanese who reach retirement age and strengthen social solidarity, which is very important for Lebanon these days,” said Luca Pellerano, Senior Social Protection Specialist who has led technical engagement on the project from the ILO Regional office in Beirut. “This has fundamental importance, not only for reducing social vulnerabilities but also for ensuring the proper functioning of the entire social security system. The new law should encourage employers to declare full salaries to the NSSF, from which other branches of the system - most importantly the health insurance branch - will in turn benefit.”
The ILO will now shift its focus towards supporting the NSSF and social partners in its successful and timely implementation - the next significant challenge in this endeavor, according to the statement.
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