File Photo: The headquarters of Egypt’s Parliament in the Administrative Capital
The reform seeks to strike a careful balance between safeguarding pensioners’ rights and ensuring the system's financial viability, enabling it to meet both current and future obligations without placing undue strain on the state budget.
The draft law is built on a dual approach that integrates social and financial considerations. It aims to strengthen social protection—seen as a pillar of national security—while anchoring the system on sound actuarial principles to ensure sustainability.
Among its key objectives is maintaining pensions as a stable source of income for vulnerable groups, helping them cope with rising living costs and preserve a decent standard of living.
At the same time, the amendments aim to restructure the financial relationship between the state treasury and the National Organization for Social Insurance to clarify obligations and ensure a fair and disciplined distribution of financial burdens.
The session was chaired by Hisham Badawy, who oversaw deliberations on the amendments, which come amid accelerating economic changes and mounting fiscal pressures on the insurance system in recent years.
The law also addresses longstanding financial entanglements that have hindered system efficiency, introducing clearer rules for debt repayment and financial flows.
It further emphasizes reliance on actuarial studies in legislative decision-making to maintain equilibrium between contributions and benefits and to avoid future funding gaps.
Another key feature is linking pensions to inflation rates in a controlled manner, preserving beneficiaries’ purchasing power without undermining financial stability.
The amendments also aim to enhance the institutional capacity of the National Organization for Social Insurance, granting it broader financial and legislative tools to manage its resources more efficiently and respond to future challenges.
A central component of the reform is the restructuring of the annual installment paid by the state treasury to the insurance authority.
Under the new provisions, the installment is set at EGP 238.55 billion starting July 2025, with an annual increase of 6.4 percent from July 2026, gradually rising to 7 percent in subsequent years.
An additional EGP 1 billion will be added annually for five years.
The repayment period for these obligations has also been extended to 50 years, easing the annual burden on the state budget while ensuring a steady flow of resources to the insurance system.
The amendments further include the settlement of outstanding debts, including treasury bonds and liabilities stemming from previous legislation, in a step aimed at improving the system’s financial clarity.
Some MPs voiced reservations during discussions, particularly regarding the transparency of the assumptions behind the proposed increase in rates and the need for more detailed numerical data.
Originally, the draft proposed amendments to Articles 22 (second paragraph, clause 2), 111, and 156. However, the joint committee ultimately retained Articles 22 and 156 without change, focusing the reform on revising Article 111, which constitutes the core of the financial restructuring.
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