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The Key Highlights of Iraq's Latest Social Security Legislation

Post By: Shahin Yasin - shahin.yasin@muayadandassociates.com Print Post

The Key Highlights of Iraq’s Latest Social Security Legislation

In a significant move to improve the well-being of its citizens, the Iraqi parliament recently voted on a comprehensive and forward-looking legislation which is the new Pension and Social Security Law (“the New Law”). While still awaiting implementation, the importance of this Law is already making waves across the nation. With its wide-ranging scope, it promises to bring about a new era of social protection, financial security, and improved quality of life for retirees, surpassing the limitations of the current law. This article explores the key features of this transformative legislation, examining the broader possibilities it covers and the potential positive impact it could have on the lives of numerous Iraqi citizens.

On Wednesday, May 17, 2023, the Iraqi Parliament voted to approve the new Pension and Social Security Law for workers in the private sector. The law introduces a range of benefits and implements long-term reforms to the social security system for private sector workers. The New Law will replace Law No. 39 concerning pensions and social security for private sector workers from 1979, aligning the private sector social security system with the International Labour Organization’s Social Security (Minimum Standards) Convention, 1952 (No. 102).

The aim of the New Law is to provide broad coverage for workers in all three sectors (private, mixed, and cooperative), ensuring that every Iraqi worker is included under the social security law to guarantee a dignified life for them. The law also aims to expand the social protection base to cover broader segments of Iraqi society, relieving pressure on the government sector and directly supporting the private sector. Opportunities and rights will be balanced through granting every Iraqi the opportunity to be covered by social security, with special consideration for gender equality and including retired workers in the healthcare coverage.

The most important advantages of the new Pension and Social Security Law are as follows:

  1. Addition of an optional retirement branch to the social security system, the inclusion of government sector workers for reward, promotion, and retirement purposes, and the introduction of a retirement formula that ensures their psychological and financial stability, thus ensuring their equality with government retirees.
  2. The possibility for workers who do not have the required service period to qualify for retirement to purchase service, and any Iraqi can voluntarily secure their retirement. Additionally, it guarantees the transfer of partial disability pension to the heirs upon the retiree’s death, along with granting annual cost of living allowances.
  3. Working women in the private sector will have a larger share in the New Law, with significant privileges, including pregnancy and maternity leave, and they will receive full salaries.
  4. Reducing the percentage of worker disability from 35% to 30%. If a worker’s disability reaches 30%, they will be entitled to a partial retirement salary. If the disability percentage is less than 30%, the worker will receive a compensatory bonus.

Disability Retirement

In both laws, the calculation for disability retirement salary is based on 80% of the average wage earned in the final year of employment. However, the New Law introduces an important addition to the equation. It grants a 20% increase in the retirement salary if it is confirmed that the affected individual requires assistance at the time of appearing before the committee.

Furthermore, there is a noteworthy change in the eligibility criteria for partial retirement salary. Under the current law, workers were entitled to a partial retirement salary if their disability percentage reached 35%. In contrast, the New Law lowers this threshold to 30%, making it easier for workers to qualify for partial retirement benefits.

Unlike the current law, the New Law specifically addresses this situation. In cases where the disability percentage is below 30%, a compensatory bonus is provided.

Disablement from Work Guarantee

Under the existing law, the absence of a disablement guarantee leaves workers vulnerable during times of disability. Fortunately, the enactment of the New Law brings a transformative change, ensuring a safeguard for workers facing disablement. This critical provision guarantees disablement from work, subject to specific conditions. The introduction of this guarantee marks a significant step towards enhancing social protection and fostering a more inclusive and compassionate system for the workforce. Now, workers can find relief in knowing that their financial security will be protected if they meet the prerequisites laid out in the new legislation. The New Law addresses the following criteria:

  • Minimum Contributions: To be eligible for the disablement benefit, the individual must have made a minimum of 24 contributions to the social security system based on a published copy of the Pension and Social Security Law on the Iraqi Parliament website. This criterion aims to ensure that those seeking assistance have been active participants in the workforce and have contributed to the system.
  • Ability to Work: One of the fundamental requirements is that the person should be capable of performing work. This criterion ensures that the benefit is extended to those genuinely facing impairments that hinder their ability to work.
  • Registration: The individual must be registered with the relevant authorities to avail themselves of the disablement guarantee. Proper registration ensures that deserving candidates receive the necessary support promptly.
  • No Voluntary Resignation: Workers who have voluntarily resigned from their previous employment are excluded from this guarantee. The provision aims to address cases where individuals might seek undue benefits after voluntarily leaving their jobs.
  • No Criminal Record: Individuals with a criminal record, either for a felony or misdemeanor, are not eligible for this benefit. The law seeks to maintain integrity and compliance among beneficiaries.
  • No Serious Offense: Those who have committed a serious offense are also excluded from the disablement guarantee. This condition reinforces the importance of responsible conduct and adherence to legal norms.

It is essential to highlight that the duration of compensation varies based on the worker’s contribution history. For those with a contribution balance of no less than 24 months, the benefit extends to 6 months, and individuals with no less than 48 months in their contribution history can avail themselves of the guarantee for 6 months. Furthermore, beneficiaries can only claim this benefit up to a maximum of three times, emphasizing the intent to assist during periods of genuine need.

In conclusion, Iraq’s new Pension and Social Security Law marks a significant milestone in safeguarding the well-being of its citizens. By introducing comprehensive reforms, the law promises to create a more secure and dignified life for retirees, while also extending vital protections to workers facing disablement. With a focus on inclusivity, gender equality, and expanded social protection, this transformative legislation aligns Iraq’s social security system with international standards and demonstrates the government’s commitment to fostering a stronger and more prosperous society.

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