The retirement pension plan, set to replace the end-of-service benefits, was approved by Parliament on December 15. Nevertheless, its implementation hinges on the signing and promulgation of approximately fifteen implementation decrees.
Mohamad Karaki, the General Director of the National Social Security Fund (CNSS), has indicated that the implementation of the new retirement pension plan, which will replace the existing end-of-service benefits, will not happen before another two years.
The retirement pension bill, as outlined in decree No. 13760, was approved by the government over twenty years ago during General Emile Lahoud’s presidential term. The project, which has been shelved ever since, resurfaced in December 2023.
The good news
The retirement pension plan is welcome news for the active workforce. It will enable them to regain confidence in the prospect of a welfare state that can ensure a dignified life after retirement. The primary objective of the law is to safeguard the most economically vulnerable segments, who have struggled for decades, from the loss of market value of their end-of-service benefits. Consequently, it seeks to relieve younger family members of their financial obligations towards their elders.
The retirement pension plan is an opportunity for a broad cross-section of society to enroll, including liberal professionals, expatriates, employers and employees.
The calculation process of the retirement plan
The retirement pension is determined by the funds accumulated by the subscriber in their virtual account, along with the annual interest credited. The pension threshold cannot be lower than the amount calculated using one of the following two methods:
1- The member who has contributed for a full 15 years receives 55% of the official minimum wage approved at the time of retirement. This percentage increases by 1.75% for each additional year of contribution, up to a maximum of 80% of the officially approved minimum wage at the retirement date.
2- The pension is calculated at 1.33% of the average declared salary of the members over their entire contribution period. This salary average is annually updated until the retirement date. The contributor's salary indexation is also revised based on the increase in the index of their average salary. It is assumed that the retirement pension for those with 40 years of contributions, for example, will not be lower than 53% of their average salaries reported to the CNSS. Similarly, for those with 30 years of contributions, it will not be lower than approximately 40% of their average salaries reported to the CNSS.
In this context, the law has stipulated that members of the pension scheme may benefit from the capitalization system if the investment fund of contributions generates higher projected income.
Severance withdrawal
For CNSS members who have claimed their end-of-service benefits and are still working, their affiliation date to the new retirement system is calculated from the day following the settlement date of their benefits. It's important to note that the amounts of adjustments shouldered by employers or liberal professions have not been eliminated.
Restructuring
Furthermore, the law on the retirement pension scheme has stipulated a restructuring of the CNSS administration, which will be automated within a year if the needed funding for the process is available. Thus, the Board of Directors will consist of ten members: (two government commissioners, four experts from the most representative professional organizations and four experts from workers' organizations), who will be appointed within six months by a decree issued by the Council of Ministers.
In the upcoming period, the CNSS will include four entities: the Board of Directors, the Technical Committee, the Investment Committee and the General Manager of the fund, with the secretariat functions falling under the responsibility of the latter. Members of these entities will be appointed through a decree in the Council of Ministers for a five-year term.
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