Fit for purpose pensions

Ahmed Kotb , Wednesday 5 Oct 2022

A closer look into the proceedings at last week’s Arab Pensions and Social Insurance Conference

Fit for purpose pensions
Al-Qabbaj

 

Addressing last week’s Arab Pensions and Social Insurance Conference which took place in Sharm El-Sheikh under the title “Arab Pensions Outlook 2050 — Change and Opportunity”, Gamal Awad, chairman of Egypt’s National Authority for Social Insurance, underlined the importance of Arab countries sharing their experiences in investing in social insurance funds and anticipating the future prospects of pension and social insurance systems.

The conference was attended by Arab ministers, officials, and representatives of international organisations and private sector companies.

“Successive crises experienced by the world — the coronavirus pandemic, the Russian-Ukrainian war, the food and energy crisis and the global economic crisis — have cast a shadow on Arab social insurance systems,” Awad told participants, making it imperative to double efforts to achieve sustainable development and take the actions needed to ensure every individual can access comprehensive, adequate, and sustainable protection throughout their life cycle.

Awad noted that in recent years international interest in Egypt’s experience in reforming its pension system had grown alongside Egypt’s own efforts to develop the system.

The incredibly complex financial arrangements between the Ministry of Finance and the National Authority for Insurance and Pensions had developed over half a century, and were only untangled by Social Insurance and Pensions Law 148/2019 which took a long-term view of existing debts and future obligations.

According to Awad, 75 per cent of the pension funds are now invested in bonds and treasury bills, a low-risk option, while the remaining 25 per cent is free to be invested in other financial instruments.

Minister of Social Solidarity Nevine Al-Qabbaj stressed the role pension systems play in providing a regular income for pensioners. She noted that a 2021 report by the International Labour Organisation revealed that only 47 percent of the world’s population benefit from one or more social security programmes, while 53 per cent lack any kind of social protection.

Al-Qabbaj said that in Egypt 78 per cent of people above retirement age receive a pension, 19 per cent of the unemployed receive benefits and 34 per cent of people with disabilities receive some form of income support.

Minister of Finance Mohamed Maait said that the pressure global economic challenges have placed on national budgets, especially the emerging economies in the Arab region, required an expansion of social security umbrellas.

Adel Al-Asoumi, president of the Arab Parliament, also underlined the importance of exchanging experiences when it comes to social security and restructuring systems to keep pace with changes that have occurred in the Arab world.

Marcelo Abi Ramia, secretary-general of the International Social Security Association, believes innovative solutions for social security systems that aim to reduce poverty and achieve accelerated sustainable development are needed now more than ever.

“Social security has become more important given all the current challenges,” he said, adding that protecting people from poverty through social security systems must be prioritised.

The two-day conference, held in Egypt after five consecutive years of being hosted by Bahrain, discussed the reforms needed to deliver sustainable pensions in the Arab world, equality and equity, managing private pension funds, actuarial assumptions and post-pandemic investing.

The conference recommended further developing activities so that it becomes an umbrella organisation that includes all institutions working in the field of social insurance, and the development of mechanisms to maximise the exchange of knowledge between social security institutions and the dissemination of relevant research.

The conference agreed on the importance of spreading awareness about the importance of insurance to citizens, business owners, pensioners, and beneficiaries in campaigns that use simple language, and of conducting community dialogues with retirees on the potential reform of retirement systems.

Participants also recommended adopting and implementing digital transformation policies and strategies with the aim of enhancing governance and transparency.

*A version of this article appears in print in the 6 October, 2022 edition of Al-Ahram Weekly.

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