The creation of a viable social security net in Lebanon inched a step forward as the cabinet adopted a plan for a national pension project, under which retirees would receive continuous monthly pension payments and be insured for medical services. If passed into law, the plan would gradually replace the one-time end-of-service indemnity payments scheme managed by the National Social Security Funds (NSSF).
The plan’s provisions stipulate that participants can receive pension payments after a minimum employment of 20 years, during which the retiree and his employer would contribute a total of 12.25% of the retiree’s salary: 5% deducted from the salary and 7.25% payment by the employer, up to a salary ceiling of $3,340. Employers would also be responsible to pay a contribution to their employee’s retirement health insurance, amounting to 5% of the salary without a ceiling.
Participation in the scheme would be mandatory for all new employees entering the job market (more than two-thirds of the Lebanese workforce is younger than 35) and all those currently enrolled in the NSSF who were born after 1969. Working persons born before 1969 may participate on a voluntary basis, on condition they do not withdraw their end-of-service indemnity and will have at least 20 years of insured employment at their retirement.
Pension advisors and insurance actuaries Muhanna group, who drew up the pension project for the Lebanese government, set the minimum monthly pension at $120, based on an employee earning a minimum salary of $200 [CORRECT?] over 20 years of membership in the scheme. If he or she is registered for 40 years, the minimum monthly pension would be $240. [CORRECT?] Under the model, a person starting to contribute at a salary of $600 and average annual salary increases of 3% would reach a pension of $642 after 30 work years, or 44% of his final salary.
Given the political stakes involved in the plan (and it was largely depicted in the local media as a defeat for Speaker Nabih Birri, who has considerable influence over the NSSF), debate over the plan is far from complete and adoption of the plan in parliament is anything but certain. After being passed into law, it would take at least two years to implement the scheme.
