A decree to retroactively raise pensions to 15 percent from 10 percent effective 2007 was issued by Egypt's president on Tuesday, costing the budget LE1.8 billion.

The new pensions rate will be implemented in January 2015 and benefit some four million individuals, the deputy head of the social insurance authority told state-run news agency MENA on Wednesday.

In 2007 the government increased payrolls without implementing a proportionate increase in pensions, a source familiar with the matter explained to Ahram Online.

The source explained that this also happened in 2005 and 2006 and that pensioners at the time won a lawsuit to receive the proportionate increase.

Since 2007 payroll raises have coincided proportionate increases in pension rates, he added.

The cost of raising the pensions will be deducted from the budget’s general reserves, spokesperson for the finance minister, Mesbah Qotb, told Ahram Online.

The state budget for fiscal year 2014/15 accounted for almost LE61 billion to support insurance and pensions schemes.