Qatar has announced its new retirement pension plan and issued a Social Insurance Law regarding pensions and retirement for Qatari citizens in Qatar. The new provisions will also apply to employers in the private sector, whether the employer is established through the jurisdiction of the State of Qatar or in one of the relevant non-State jurisdictions (the Qatar Financial Centre). In this article, we consider how the changes to retirement and pension entitlement will operate and how they will impact upon employers in the region.
In line with Qatar’s 2030 National Vision seeking to ensure that Qatar becomes an advanced society capable of sustaining its development and providing a high standard of living for its people, the Social Insurance Law and impending regulations are intended to reduce the negative impact of early retirement. The new Law aims to motivate citizens to stay in the labour market for as long as possible.
The application of the new provisions to all public and private employers means that there will be many employers who will need to acquaint themselves with the pension system and budget and implement changes to their payroll to pay the monthly contributions.
Detailed implementing regulations will be published to provide further details of how the Law will operate in practice; whilst we expect these to be issued before the Law is implemented, this may not be the case.
The Retirement and Pensions Law (Qatar Law No. 24 of 2002) currently regulates social insurance in Qatar. The General Retirement and Social Insurance Authority (GRSIA) announced that the new Social Insurance Law (Qatar Law No. 1 of 2022) (the Law), is set to be effective as of 3 January 2023 (six months from the date of its publication in the official Gazette on 4 July 2022).
The announcement of the Law introduces several key changes to the current social insurance system in Qatar, which include the following:
- The provisions of the Law will apply to Qatari citizens or Insureds working in both the private and public sectors:
- Presently, social security only applies to Qatari citizens (and some GCC nationals) employed by ministries, public institutions, agencies, joint stock companies and others as determined by the Council of Ministers at the GRSIA. However, the scope of the Law is much wider as it will also apply to employers in the private sector, which are every natural or juridical person, who hires one or more Qatari citizen on a regular basis in return for a wage; we will have to await the regulations to determine the how they relate to GCC nations. The Law provides that the private sector will include workers that are subject to the provisions of Qatar Law No. 14 of 2004, as amended (the Qatar Labour Law) or in companies and institutions that are excluded from the Qatar Labour Law and have their own staff regulations. The Law could also exempt those working for family members and this may become clearer with the implementing regulations. The scheme will be optional for Qatari citizens, (to be specified by the GRSIA), that are in a social insurance system chosen by them (whether as an employee or self-employed) and which shall be appropriate for their estimated income level (the income bracket system).
- Increased monthly contribution rates and housing allowance contributions:
- The minimum amount of pension payable monthly during retirement for Qatari citizens employed in the public sector will be at least QAR 15,000 and a housing allowance of up to QAR 6,000 will be added to the pension. These minimum rates may also apply to Qatari citizens employed in the private sector, dependent upon approval of the Cabinet and the Minister.
- The minimum retirement age will be fifty years and the minimum required service period to qualify for a pension entitlement will increase from fifteen years to twenty-five years. There will also be gratuity awarded by the pension fund for employees in the public sector who have contributed to the scheme for thirty years or more, at retirement age. Again, pending Cabinet and the Minister’s approval, this entitlement may also apply to employees in the private sector.
- The monthly contribution rate will rise from 15% to 21% of an employee’s basic salary or wage of the Insured that is paid in addition to social allowance and housing allowance in accordance with the provisions of the current social insurance law, without exceeding QAR 100,000. Employers will be required to contribute 14% and the employee will be required to contribute 7%. However, with approval of the Council of Ministers, the Public Treasury of the State may bear a percentage of the employer’s contribution, in accordance with any controls it sets.
- Those who have contributed to the pension fund for at least fifteen years will be entitled to receive a housing allowance of up to QAR 6,000 per month during retirement.
- Penalties will be imposed:
- The Law includes provisions for imprisonment of up to six months and fines to employers of up to QAR 30,000 for failures to make contributions and requiring employees to bear the value of all or any contributions, in violation of the Law.
- The Law covers the transfer of pension payment rights to beneficiaries in the event of the insured person’s or pensioner’s death. Non-Qatari children of Qatari retirees, non-Qatari widows, non-Qatari parents, and non-Qatari siblings can be beneficiaries as well as Qatari nationals.
- The Law provides that if a female employee resigns to care for her special needs children, she may keep her pension with no reductions, provided she has an active service period of at least twenty years.
- If a pensioner returns to work in the private sector, provided they make no further contributions, their pension will be added to their salary.
Private and public sector employers will need to review the Implementing Regulation when it is published and will be likely to need to assess their workforce to determine which employees are eligible. Once the Law comes into effect, they will need to file an application with GRSIA to register and submit a list of participating employees to the authority within the prescribed timescale.
Employers may also need to review contracts of employment for eligible employees and will most likely need to vary them to reflect any contributions that will need to be paid. This will include communicating the changes to their employees and making any necessary adjustments to ensure they have adequately budgeted for their employer contribution costs.
Note: All Qatar laws (save those applicable to the Qatar Financial Centre) are published in Arabic; there are no official translations. Clyde & Co works from its internal translations and draws on market experience when assessing the text of new laws and regulations.