A plan to allow civil servants to retire before 45 with minimal effect on their pension has been blocked by Bahrain’s Shura Council, which heard it was too expensive and could potentially lead to a shortage in government employees.

The decision was taken after Bahrain's Pension Fund Authority (PFA) warned it would place a massive burden on the country's finances, reported the Gulf Daily News (GDN), our sister publication.

Rules currently state that government workers who retire after 50 qualify for 80 per cent of their pension.

MPs wanted to allow them to retire below 45 with 75 per cent of their pension, but the plan was vetoed by the National Assembly's upper chamber yesterday.

The parliamentary proposal, approved by MPs in June, also included allowing people to retire between 45 and 50 with 77.5 per cent of their pension.

Shura Council services committee chairman Abdulrahman Abdulsalam said Bahrain would face a shortage of civil servants if MPs had their way.

"The government will see a big gap in its employment structures if seniors decide to retire halfway down the line," he said.

"Allowing them to retire 15 years before their time for just an additional 5 per cent deduction (on top of the normal early retirement deduction) from their annual pensions, which is nothing, will encourage many to leave.

"The early retirement scheme proposed by parliament means the PFA will shoulder huge expenses, and this will certainly affect its status and commitments.

"Around 25 per cent (of civil servants) choose to take early retirement after the age of 50, receiving 80 per cent of their pension.

"That's an enormous percentage that also requires attention in future as it costs the fund BD2.4 million annually."

A PFA official said during the council's weekly session yesterday that only 15 per cent of civil servants worked until 60, which is the official retirement age.

BD4,000 pension cap move rejected

Meanwhile, efforts to impose a BD4,000 ($10,550) cap on civil servants' monthly pensions were yesterday rejected by the Shura Council, according to another report in the GDN.

It was proposed by MPs who wanted to bring the public sector in line with the private sector, which had a BD4,000 pension cap introduced two years ago.

Council services committee chairman Abdulrahman Abdulsalam said the pension cap was only introduced in the private sector because employers were meddling with wage records to guarantee their staff a nice retirement package.

"In the case of government employees, the case is different since all follow wages charts that are clear," he said.

"All government employees come under the Civil Service Bureau (CSB) and in most cases their pensions don't exceed that amount.

"Those whose wages or pensions exceed that amount are employed in government authorities before they were included in the CSB and their numbers are shrinking as many are retiring."

However, council member Dr Abdulaziz Abul said it was unfair to impose the cap only on the private sector.

He was cut short by council first vice-chairman Jamal Fakhro, who claimed the whole pension contribution system was unfair.

"Government employees' monthly contributions to the Pension Fund Authority are 24 per cent, while others only pay 18 per cent," he said. – TradeArabia News Service