New Insurance Law: Social Insurance and Pensions Harmonization Law

New Insurance Law: A Unified Law for Social Insurance and Pensions

On August 19, 2019, the Egyptian Parliament issued the new Social Insurance Law No. 148 of 2019. It entered into force on January 1, 2020, with the exception of certain articles (Articles 111, 112, 113, and 114) regulating the state treasury's obligations, which entered into force on August 20, 2019.

The executive regulations of the Social Insurance and Pensions Law were issued by Prime Ministerial Decree No. 2437 issued on September 28, 2021.

The new Social Insurance Law, comprising 170 articles, regulates and unifies all rules related to pensions and employee rights, replacing Law No. 179/1975 on Social Insurance, Law No. 108/1976 on Social Insurance for Employers and similar matters, Law No. 50/1978 on Social Insurance for Egyptians Working Abroad, and various regulations and decisions. In the following lines, we will highlight the main features of the new Social Insurance and Pensions Law:

1- Extending social insurance protection to include new categories of employees and employers.

The new Social Insurance Law covers a number of insurance and pension beneficiaries, including 10 categories covered for the first time, such as temporary and seasonal workers, home managers, small-scale agricultural tenants, property owners, land transport employees, fishermen, domestic workers, and owners of environmental, rural, and family industries. It also covered a new category of employers (i.e., sole proprietors) as a result of amendments to the Companies Law in 2017.

2- Raising the Retirement Age

The new Social Insurance and Pensions Law established a single basis for calculating pensions for all categories of the country's workforce to achieve equality. It also laid out a plan to raise the retirement age to address the financial and actuarial deficit in the pension system and reduce the burden on the public treasury. The retirement age will be 60 for employees employed by third parties and Egyptians working abroad, and will increase to 65 on July 1, 2040, gradually by a Prime Ministerial decision. The retirement age will be 61 in July 2032, 62 in July 2034, 63 in July 2036, 64 in July 2038, and 65 in July 2040.

The new Social Insurance Law also reduced social insurance contribution rates to encourage employers to insure their workers, while maintaining the benefits provided by existing social insurance laws.

3- Unifying the basis for calculating the insurance contribution payment rate

According to the new Social Insurance Law, 29.75% of the total salary of public and private sector employees is allocated to a pension fund, of which the employee contributes 11%, while the institution contributes 18.75%.

4- Unified Fund

The new Social Insurance Law combines the insurance and pension funds into one unified fund, administered by the National Social Insurance Authority. The Authority has a legal personality and technical, financial, and administrative independence, reporting to the Minister of Social Solidarity.

5- Unemployment Insurance (three to seven months)

The new Social Insurance Law established unemployment insurance as a new benefit for those who become unemployed during their coverage period if they have contributed to the social insurance system for at least one year. This insurance is paid for 12 weeks for those who have contributed for less than 36 months and for 28 weeks for those who have contributed for more than 36 months.

6- Pension Benefits

The Social Insurance and Pensions Law sets the basic pension rate for all workers at at least 65% of the minimum wage. The National Wages Council will set the minimum wage for private sector employees. It will increase annually by up to 15% of the inflation rate. Workers in hazardous or difficult jobs will also receive increased benefits, but employers will be required to pay higher contributions. In certain circumstances (for example, if an employee leaves Egypt), the employee will be eligible for a one-time compensation in lieu of the pension contributions paid.

7- Early Retirement

The Social Insurance and Pensions Law gives employees the option of early retirement provided they have been in insurance for at least 25 years.

8- Penalties Imposed by the Law

To prevent insurance evasion and protect the rights of insured persons, the law imposes a penalty of imprisonment for a period not exceeding six months and a fine of no less than EGP 20,000 and no more than EGP 100,000 for those employees of the Authority who are legally authorized to enter the workplace, or who are denied access to records, books, documents, and papers required for the implementation of the law, instead of the one-month imprisonment and a fine of EGP 100 stipulated in the current law.

The law also imposes a penalty of imprisonment for a period not exceeding one year and a fine of no less than EGP 10,000 and no more than EGP 50,000 for those who unlawfully obtain Authority funds, provide false information, or refrain from providing information that must be disclosed, instead of the three-month imprisonment and a fine not exceeding EGP 500.

This concludes our explanation of the new Social Insurance and Pensions Law. If you have any questions or legal advice, please contact us.