Kuwait began its first pension scheme in 1966 within the public sector and civil employee retirement system. The first legislation regulating pensions was enacted in 1960. These regulations covered government, military and civil employees.
The state of Kuwait’s social security system was set up in 1976 in accordance with Amiri Law Decree Number 51. The Public Institution for Social Security was thereby established to implement the Kuwaiti social security system, covering old age, sickness, death and disability insurance for public and private sector workers as well as the self-employed.
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Kuwait’s social security system covers all Kuwaiti citizens who play an active role in the community, regardless of occupation. Fahad Al Rajaan, Director General, has presided over the Public Institution for Social Security since 1984. The social security system also protects third party employees working in any sector, as well as Municipal Council and national Assembly members and trainees for work sponsors and mayors, together with the freelance workers such as lawyers, engineers, physicians and shopkeepers as well as Kuwaitis working abroad.
Funding for the Kuwaiti State Pension
The Kuwaiti state pension is funded by contributions from the insured person, their employer, and the government’s State Public Treasury department. Employee’s are subject to mandatory deductions of a percentage of their monthly salary, much in the same way that British employees pay National Insurance. Employers pay double the employee’s contribution to the government.
The Kuwaiti State Treasury pay an estimated 10% of their revenue to insured civilians, with 32.5% being paid to military personnel.
The Kuwaiti State Retirement Pension
The Kuwaiti social security system covers all sectors in society, protecting its citizen’s rights and benefits. The state retirement pension is regarded as the most prominent benefit offered under social security law in the country. Indeed, the setting up of a state retirement pension scheme was the key objective of the majority of Kuwaiti social security legislation. Upon retirement, Kuwaitis are entitled to 65% of the last salary they earned in their working life (75% in the case of those engaged in the military). In the case of the death of the insured person, or disability, they or their beneficiary is entitled to a state pension of up to 95% of the worker’s salary (100% in the case of military personnel).
For those who have contributed towards the state pension scheme for a period of 30 years, they receive a maximum allowable pension of some 95% of their last salary (100% in the case of military employees).
Flexibility of the State Pension System
The Kuwaiti state pension system is regulated by the Public Institution for Social Security’s Board of Directors and Director General, Fahad Al Rajaan. The Board is responsible for updating social security legislation in order to keep it in line with the rapid growth of society and maintain flexibility. Al Rajaan and the Board of Directors has powers to draw up general policy, including:
- Approving annual reports on its operations.
- Approving final annual balance sheets and draft budgets of the Institution.
- Issuing orders required in the regulation of its administrative and financial affairs.
- Determining Institution staff salaries and laying down rules regarding internal employment affairs.
- Proposing orders, regulations and laws in respect of social security programmes.
The Employer’s Obligations
The employer is required under Kuwaiti law to register the insured person’s employment. Upon registering (in the case of a company, providing the relevant documentation such as a certificate of incorporation), the employer must obtain an employer registration number. It will then be required to provide the Public Institution for Social Security with details of all Kuwaiti employees, including the following documents:
- A copy of the employee’s age assessment or birth certificate.
- A copy of their nationality certificate.
- A copy of their identity card.
Civil Identity Cards
All Kuwaiti residents are required to carry a civil identity card. Parents must apply for registration of infants within 60 days of their birth. All expatriates and foreign workers are obliged to apply for civil identity cards no more than 30 days after gaining residency.
Kuwaiti state pensions are only available to Kuwaiti nationals. Expats are granted residency in the State of Kuwait only once they can evidence having received a firm job offer. It is possible for expats to retire to the country, provided that they have the funds available to see them into old age. These may come from a state pension from their home country or a privately funded pension fund. Expats must be able to prove that they have sufficient sums to support themselves and will not try to live off the state. Changes to Kuwaiti property regulations mean that expats who have worked for a long time in the country will be able to purchase a property in which to reside. A retired person may be able to obtain permission under special circumstances from the authorities in Kuwait to buy property, particularly if they have lived there for some time and can provide proof of adequate income.