GOSI LAW

1 SCHEME DESCRIPTION
1.1 Introduction
In accordance with the Law on Social Insurance – Decree Law No. 24/1976, GOSI has currently two types of insurance:

• Insurance against old age, disability and death – Type A benefits
• Insurance against employment injuries – Type B benefits

Eligible participants are all Bahraini and non-Bahraini workers who work in the Private Sector in accordance with employment contracts. The following employees are not eligible to join the scheme: employees working in international missions, domestic servants, employees engaged in casual temporary work and other special groups as specified in Article 3, Chapter 1 of the Social Insurance Law.

1.2 Scheme Rules applicable for the valuation – Contributions
Contributions for Type A benefits (insurance against old age, disability and death) and for Type B benefits (insurance against employment injuries) are summarized as follows:

• Type A contributions – monthly income is generated by a 5% employee contribution based on the insurable monthly salary and a 7% employer contribution rate based on the employees’ total monthly salary. subject to a salary tap of BD 4000
  In addition, interest earned on the investment of the fund, the indemnity due to each insured person, interest payable in case of evasion or delay of payment of contributions by the employer, transfers from the Government Pension and Retirement Fund to the General Organisation, loans appropriated in the State General Budget, donations and other income are allocated to the fund. Amounts paid to the fund by the State Treasury to cover any deficit shall be regarded as a debt owing from the GOSI and shall be settled from any surplus (arising from type A or type B funds) in succeeding years.
  
  Type A benefits are limited to Bahrainis only and the benefits do not apply to conditions of work injuries or occupational diseases.
  
  
• Type B contributions – monthly income is generated by a 3% employer contribution rate based on the employees’ monthly insurable salary subject to a salary cap of BD 4000. All investment income is allocated to the fund.
  It is noted that Type B benefits are provided to Bahrainis and Non-Bahrainis and benefits are applied to conditions of employment injuries only.

1.3 Type A Benefits
The benefits paid from fund A are:

a. Old Age Pension and Lump Sum Compensation (including reduced pension on early retirement)
b. Natural Disability Pension and Lump Sum Compensation (for active members)
c. End of Service Benefit – ESB
d. Survivor Pensions and Lump Sum Compensation
e. Death grant
f. Marriage grant
g. Funeral grant

1.3.1 Old Age Pension
a. Conditions
For the Type A benefits to apply, the insured must satisfy one of the following three (3) categories to be eligible for an Old Age Pension (OAP). Each category is determined by age at termination of service, sex, and the number of completed insurance month contributions, as follows:

1. For early retirement (prior to the normal retirement age), the minimum number of contributions by men is a total of 240 months and by women a total of 180 months over the subscription period. The pension is subject to reductions set out in Table 1 below if the age at retirement is less than 55.
   
2. For retirement at the normal retirement age (60 for men and 55 for women), the minimum number of contributions by men is a total of 180 months and by women a total of 120 months over the subscription period.
   
3. For late retirement, after the normal retirement age, the minimum period of contributions is a total of 120 months with 36 continuous monthly contributions over the last 5 years.
   

An additional sixty (60) insurance months – or five (5) insurance years – is granted to the insured whose contributions satisfy or exceed the contribution requirements of (ii) and (iii) above. The combined contributory and hypothetical period of an insured person shall not exceed thirty years (any contributory period or periods for which a lump sum compensation had been paid, shall be added to the subsequent period or periods to determine the eligibility of the insured person to the hypothetical period or any part thereof within the aforesaid 30-year limit).

If employment is terminated and the insured does not qualify for a pension according to the above categories, the insured receives an End of Service Benefit.

b. Calculation of benefits
For the purposes of this report, the OAP benefit is calculated as below:

• The basic OAP benefit is payable monthly and is calculated for all the three types of retirement as follows:

S₁ = Average monthly basic salary over the last two years of contributions before retirement
N₁ = Includes both the actual contribution period and the pre-1976 service if requested in writing by the insured (the pre-1976 period is determined to be equal to that which his equity in the private schemes and/or his leaving indemnity paid on his behalf for service prior to this social insurance shall permit in accordance with Schedule 4 annexed to the Law).

A 10% increase is applied to the above-calculated pension by virtue of the Amiri Decree-Law 8/1980 – pensions less than BD 50 per month were increased by 15%.

So the effective Old Age Pension is:

For early retirement, the same conditions apply as for old age retirement pension above, provided the member has fulfilled the conditions as stated above for early retirement. Pensions however are subject to reduction factors. The reduction factors in Table 1 below apply to the basic OAP benefit. The reduction rate depends on the age when applying for retirement.

Table 1

For late retirement the benefit paid is calculated as for old age pension with no adjustment provided that the member meets the eligibility criteria.

The minimum pension is the lower of BD 150 per month and the average contributory wage during the last two years. The maximum pension allowed is 88% of wages on which the pension is based.

The minimum pension must be at least BD 30 for every family member, including the pensioner, provided the total does not exceed the average contributory wage during the last two years.

Lump Sum Compensation is payable to those insured people who have over the maximum pension allowed. This additional Lump Sum Compensation for Prolonged Service is calculated at a rate of 11% of the average of the last two years’ earnings for every year of extra service (over 40 years that grants the maximum pension).

The Lump Sum Compensation for Prolonged Service is equal to:

The average monthly salary referred to above must not exceed 150% of the salary of the insured at the beginning of the last five years of thes period of contribution or the period his contribution if less than five years.

1.3.2 Natural Disability Pension

a. Conditions

Disability Pension (DP) benefit is awarded when employment of the insured is terminated due to the occurrence of total or partial disability prior to normal retirement which is not related to work injuries, provided:

• There has been at least 6 consecutive months of insurance contribution prior to the occurrence, or,
  
  
• 12 discontinuous months of insurance contribution, 3 months of which should be consecutive and immediately prior to the occurrence.
  
  
• If disability does not occur after completing the minimum contribution period and if the insured person stopped contributing to the scheme, then he/she will be entitled to a pension if disability occurs within a year after the contribution was ceased and before attaining age 60 for men and 55 for women.
  
  If employment is terminated and the insured does not qualify for a pension according to the above categories, the insured receives an End of Service Benefit.

b. Calculation of benefits
The DP benefit is monthly and is the greater of

and

S₂ = Average monthly basic salary over the last year of contributions before disability occurred.
N ₂ = Includes the actual contribution period and a notional period of three years, provided the total period does not extend beyond the attainment by the insured of the age of 60 if male and the age of 55 if female.
A 10% increase is applied to the above-calculated pension by virtue of the Amiri Decree-Law no. 8/1980.

So the effective DP benefit is the greater of:

and

The minimum pension is the minimum between BD 150 per month and the average contributory wage during the last two years. The maximum pension allowed is 88% of wages on which the pension is based.
The minimum pension must be at least BD 30 for every family member, including the pensioner, provided the total does not exceed the average contributory wage during the last two years.

1.3.3 End of Service Benefit
End of Service Benefit (ESB) is payable in cases where the insured does not meet the eligibility criteria for pension payment as stipulated above and any of the following conditions hold:

1. The insured (male) has attained the age of 60 or more years
2. The insured (female) has attained the age of 55 or more years
3. The insured (female) was married, divorced or widowed on the date of lodging a claim for payment
4. Emigration of the insured; male or female
5. Departure of an insured person from the country finally or if he has taken up employment abroad on a permanent basis or has joined a diplomatic mission in the embassy or consulate of his State
6. The final judgement for imprisonment of the insured for a period of ten years or more; or the period remaining for the insured (male) to attain the age of 60 years or the insured (female) to attain the age of 55 years whichever is shorter
7. The insured becomes totally disabled and does not qualify for pension
8. The insured dies and the beneficiaries are not entitled to a pension.

The lump sum compensation shall be payable in case of death to the widow or widows of the deceased. In case there is no widow, then it shall be payable to the children of the deceased and the children of his deceased sons. In case there are no children (and no widow), then the lump sum is payable to the father and mother, and should there be no persons in the above-mentioned categories then to brothers and sisters of the deceased.
The benefit is paid, as long as there is a beneficiary. Where no heirs exist, no lump sum is payable.

The ESB is equal to

S ₃ = Average monthly basic salary over the last two years of contributions multiplied by twelve.
N₃ = Actual contribution period

1.3.4 Survivor Pensions
1.3.4.1 Survivor Pension 1 (survivors of insured members)
Survivor Pension 1 (SP1) is granted to the eligible heirs upon the death of the insured before receiving pension, provided his/her death was not related to work injuries (i.e. natural cause) and

• There has been at least 6 consecutive months of insurance contribution prior to the occurrence, or,
• 12 discontinuous months of insurance contribution, 3 months of which should be consecutive and immediately prior to the occurrence.
  If death does not occur after completing the minimum contribution period and if the insured person stopped contributing to the scheme, then he/she is entitled to a pension if death occurs within a year after the contribution was ceased, regardless of age.
  The pension is allocated to:
• Dependent children (50% of the pension allocated to this group)
• Widow or eligible widower (37.5% of the pension allocated to this group)
• Dependent parents, brothers and sisters (12.5% of the pension allocated to this group)
  If one of the beneficiaries in one of the groups ceases to be eligible, their share is passed on to the other beneficiaries in the group. If one of the groups is missing or becomes empty, that group’s share passes on to the other groups under certain conditions.
  The share of the allocated pension shall cease to be paid to:
• Any widow(s), daughters or sister(s) upon marriage. The pension will be reinstated if divorced.
• Any son upon attaining the age of 22 years or if attending higher education until attaining the age of 26 years or until he ceases education whichever is earlier.

The survivor pension benefit is monthly and is the greater of:

and

S₂ = Average monthly basic salary over the last year of contributions before death occurred.
N₂ = Includes the actual contribution period and a notional period of three years, provided the total period does not extend beyond the attainment by the insured of the age of 60 if male and the age of 55 if female.
A 10% increase is applied to the above-calculated pension by virtue of the Amiri Decree-Law no. 8/1980.
So the effective survivor pension benefit is the greater of:

and

The minimum pension is the minimum between BD 150 per month and the average contributory wage during the last two years. The maximum pension allowed is 88% of wages on which the pension is based.
The minimum pension must be at least BD 30 for every family member provided the total does not exceed the average contributory wage during the last two years.

1.3.4.2 Survivor Pension 2 (survivors of pensioners)
Survivor Pension 2 (SP2) is granted to the eligible heirs upon the death of the retiree.
The pension is allocated to:

• Dependent children (50% of the pension)
• Widow or eligible widower (37.5% of the pension)
• Dependent parents, brothers and sisters (12.5% of the pension)

If one of the beneficiaries in one of the groups ceases to be eligible, their share is passed on to the other beneficiaries in the group. If one of the groups is missing or becomes empty, that group’s share passes on to the other groups under certain conditions.
The share of the allocated pension shall cease to be paid to:

• Any widow(s), daughters or sister(s) upon marriage. The pension will be reinstated if divorced.
• Any son upon attaining the age of 22 years or if attending higher education until attaining the age of 26 years or until he ceases education whichever is earlier.
  The minimum pension must be at least BD 30 for every family member provided the total does not exceed the average contributory wage during the last two years.
  Where no heirs exist, the pension shall revert to the fund.

1.3.5 Death Grant
The death grant is given upon the death of the insured.
For an active employee, the grant is equal to:

For a pensioner, the grant is equal to:

1.3.6 Marriage Grant

A marriage grant is given to each female heir, who is currently receiving a pension, upon marriage.

The marriage grant is equal to:

Subsequently her regular pension ceases, but is reinstated upon being divorced. The marriage grant is paid only once.

1.3.7 Funeral Grant
The funeral grant is given upon the death of the insured, provided

• there have been at least 6 consecutive months of insurance contribution prior to the occurrence,
  and is equal to an amount which is determined by the Board of Management. This benefit amounts to BD 300 or BD 400 if the insured died abroad and is to be buried in Bahrain or vice versa.

1.4 Type B benefits
The six main benefits paid from Fund B are as follows:

a. Temporary Work Injury Allowance and Medical care
b. Permanent Total and Partial Disability Pension and Lump Sum Compensation
c. Survivors Pension
d. Death grant
e. Marriage grant
f. Funeral grant

The Type B benefits are applied to conditions of work-related injuries and occupational diseases only.
There are no minimum qualifying conditions to be eligible to receive a pension or lump sum on any Type B benefits based on work-related injuries.

1.4.1 Temporary Work Injury Allowance and Medical Care
Medical care is to be provided to the insured at the cost of the fund. The eligible medical services are comprehensive, providing transportation, physician and surgeon service, medicines, hospitalisation or convalescence for as long as the condition of the injured insured requires until cured or the condition stabilises.

Daily allowance (DA) is payable for conditions of temporary disability. The DA rate is based on the contributory daily wage of the insured. The benefit shall be paid for the duration of the disability including relapse of a condition until recovery or stabilisation of condition or death.

The daily allowance is 100% of the contributory daily wage of the insured for the length of his inability to work.

1.4.2 Permanent Total and Partial Disability Pension and Lump Sum Compensation
For permanent total disability (PTD), the insured is to receive a pension equal to:

If the insured is working without pay or earns the minimum wage, then every family member, including the pensioner is to receive a pension of BD 30. The minimum pension is BD 150 per month.

For permanent partial disability (PPD) and when disability is considered to be 30% or more (as per the General Organisation for Social Insurance), the insured is to receive a pension equal to:

For disabilities that are permanent partial (PPD<30) and the disability is considered less than 30% (as per the General Organisation for Social Insurance), the insured is to receive a Lump Sum Compensation equal to:

1.4.3 Survivor Pension
1.4.3.1 Survivor Pension 1 (survivors of insured members)
Survivor Pension 1 (SP1) is granted to the eligible heirs upon the death of the insured before receiving pension.
The pension is allocated to:

• Dependent children (50% of the pension allocated to this group)
• Widow or eligible widower (37.5% of the pension allocated to this group)
• Dependent parents, brothers and sisters (12.5% of the pension allocated to this group)
  If one of the beneficiaries in one of the groups ceases to be eligible, their share is passed on to the other beneficiaries in the group. If one of the groups is missing or becomes empty, that group’s share passes on to the other groups under certain conditions.

The share of the allocated pension shall cease to be paid to:

• Any widow(s), daughters or sister(s) upon marriage. The pension will be reinstated if divorced.
• Any son upon attaining the age of 22 years or if attending higher education until attaining the age of 26 years or until he ceases education whichever is earlier.
  For the survivor pension benefit the insured receives a monthly pension equal to:

The minimum pension is the lower of BD 150 per month and the average contributory wage during the last two years.
The minimum pension must be at least BD 30 for every family member provided the total does not exceed the average contributory wage during the last two years.

1.4.3.2 Survivor Pension 2 (survivors of pensioners)
Survivor Pension 2 (SP2) is granted to the eligible heirs upon the death of the retiree.
The pension is allocated to:

• Dependent children (50% of the pension)
• Widow or eligible widower (37.5% of the pension)
• Dependent parents, brothers and sisters (12.5% of the pension)
  If one of the beneficiaries in one of the groups ceases to be eligible, their share is passed on to the other beneficiaries in the group. If one of the groups is missing or becomes empty, that group’s share passes on to the other groups under certain conditions.
  
  The share of the allocated pension shall cease to be paid to:
• Any widow(s), daughters or sister(s) upon marriage. The pension will be reinstated if divorced.
• Any son upon attaining the age of 22 years or if attending higher education until attaining the age of 26 years or until he ceases education whichever is earlier.
  The minimum pension must be at least BD 30 for every family member provided the total does not exceed the average contributory wage during the last two years.
  Where no heirs exist, the pension shall revert to the fund.

1.4.4 Death Grant
The death grant is given upon the death of the insured.
For an active employee, the grant is equal to:

For a pensioner, the grant is equal to:

1.4.5 Marriage Grant
A marriage grant is given to each female heir, who is currently receiving a pension, upon marriage.

The marriage grant is equal to:

Subsequently her regular pension ceases, but is reinstated upon being divorced. The marriage grant is paid only once.

1.4.6 Funeral Grant
The funeral grant is given upon the death of the insured, provided

• there have been at least 6 consecutive months of insurance contribution prior to the occurrence,
  and is equal to an amount which is determined by the Board of Management. This benefit amounts to BD 300 or BD 400 if the insured died abroad and is to be buried in Bahrain or vice versa.

1.5 Administration Expense
The allowed administration expense is stated in the law at 7% of the total contribution made to each fund, i.e. 0.84% of the total salaries of the contributors for Fund A and 0.21% of the total salaries of the contributors for Fund B.