In the Arab Republic of Egypt, the share of population aged 65 or older is projected to increase 5.22 per cent in 2015 to 13.1 per cent in 2050, thus placing higher demands on the existing pension system. In 2013 the Government of the Arab Republic of Egypt reformed its pension system, introducing the new Old Age Pension (OAP) scheme to more effectively provide basic income security to older persons. The pension scheme is under the National Organisation for Social Insurance (NOSI), which administers funds and benefits to claimants.
Egypt’s new OAP consists of both contributory and non-contributory schemes. The contributory scheme is available to all residents aged 65 and above who have made contributions. Reforms in 2013 lowered contribution rates to 30.5 per cent, of which 19.5 per cent is paid by the employer and 11 per cent by the employee. Relatively high contributions are rewarded with very high monthly pension benefits equal to 75-88 per cent of the claimant’s last net salary before retirement, disability or death, calculated based on length of contributions. The non-contributory scheme is available to all Egyptians aged 65 and above who reside in Egypt and do not receive any other income or pension from the State. Those eligible for the non-contributory scheme receive monthly payments equal to 18 per cent of the after-tax national salary. At the time of the reforms 80 per cent of the work force was enrolled in the OAP and in 2012, Egypt’s social security system covered 31 per cent of all residents.
Egypt’s pension system dates back to 1975 with the passing of the Social Insurance Law No. 79 and has, over time, been reformed in order to increase the level and extent of coverage. The new OAP has been realised through the merger of two separate schemes, one for the formal sector and another that targeted the informal sector. The OAP thus moves toward an integrated approach and forms a fundamental part of Egypt’s social protection floor providing essential income security for older persons.
Further Reading:
Robert Holzmann, et. al. (2012). Nonfinancial Defined Contribution Pension Schemes in a Changing Pension World: Vol.1, Progress, Lessons, and Implementation. World Bank, Washington, DC. Accessed from http://elibrary.worldbank.org/doi/pdf/10.1596/978-0-8213-9478-6 on December 2016.