Qatar's impending Social Security Law, set to come into effect in early 2023, will impact all working nationals to varying degrees depending on the type of employment. Here's what to anticipate with respect to the law's impact for various employee categories, as well as the contributions expected, pension allowance calculations and retirement eligibility.
1) What has changed from the old Pension Law?
All Qatari nationals, whether operating in the public or private sector are now subject to mandatory enrollment under the newly established pension scheme once the new Social Security Law takes effect.
2) When does the new law take effect?
The new Social Security Law has been issued replacing the Retirement and Pension Law. It will come into effect starting the Jan. 3, 2023, except for certain provisions specified by the law that became effective as of the date of publication, July 3.
3) Does the pension scheme include self-employed Qatari nationals?
The new law permits optional enrollment for self-employed Qatari nationals under the new pension scheme. Self-employed Qatari nationals would be required to make contributions in the form of a 21 percent deduction from their monthly earnings.
4) Are there any new allowances?
The introduction of a housing allowance is a new entitlement under the Social Security Law. Subject to certain conditions, participants who have contributed to the fund for 15 years are entitled to receive a housing allowance; ranging in an amount up to 6,000 Qatari rials (approximately $1,648). The additional housing allowance will be added to the base salary for purposes of calculating the monthly contribution or deduction for the participant and will be included in the pension allowance calculation upon retirement.
In addition to payment upon retirement, employers will remain liable to compensate eligible participants for their housing allowance entitlement for the first 15 years of the employee's service upon termination of employment caused by the employee's death or disability.
5) How are the amounts of monthly contributions and deductions calculated?
The new pension scheme increased the total contribution to 21 percent of monthly salary, rather than the 15 percent contribution prescribed under the old Pension Law. The employer must contribute an amount equal to 14 percent of the total amount attributed to monthly salary including housing allowances upon eligibility, and the employee will be subject to a 7 percent salary deduction.
6) What is the prescribed range for monthly pension allowances?
A minimum monthly allowance of 15,000 Qatari rials (approximately $4,120) is granted to eligible employees working in the public sector; however, no minimum amount has been determined for the private sector yet.
Pension allowances granted shall be a maximum of 100,000 Qatari rials (approximately $27,465) per month in all cases, except for those who are already effectively enrolled with an amount exceeding 100,000 Qatari rials.
7) How is the new pension allowance calculated?
Under the old Pension Law, the pension allowance was calculated by multiplying 5 percent of the last earned salary by the employee's total years of service. Under the new Law, the 5 percent figure is reduced to 3 percent of the last earned salary.
8) How is current recruitment credited under the new pension scheme?
Newly enrolled participants can only carry over a maximum of five years of their service prior to the effective date of the new Social Security Law; provided that the previous years of service are compliant with the pension scheme conditions.
9) What are factors in retirement eligibility?
Age. Under the new Social Security Law, the minimum age of retirement has been increased from 40 years of age to 50 years.
Duration of Service. The minimal period required to qualify for a pension entitlement has been increased to 25 years of service, rather than 15 years. Those who complete 30 years of service or above are eligible to receive additional benefits.
10) How does the new pension scheme impact end-of-service gratuity and other labor entitlements?
End-of-service gratuity is not yet addressed under the new Social Security Law. However, employees may remain eligible for end-of-service gratuity entitlements under the Labor Law (Law No. 14 of the year 2004, the Labor Law), subject to certain conditions.
Under the Labor Law, employees may not be eligible to receive any end-of-service gratuity payment in the event that they are eligible to receive pension or retirement scheme entitlements under a plan and the value of the entitlement payments exceed the value of the end-of-service gratuity entitlements.
Similarly, eligible participants under the new Social Security Law are not entitled to benefit from more than one pension or retirement scheme. If more than one scheme is applicable; the employee will be entitled to the scheme of higher value.
11) What happens if there is resignation or misconduct?
In the event that participation in the pension scheme is suspended due to the termination of employment and monthly contributions, prior to the age of 50, and as a result of voluntary resignation or termination for misconduct; the pension allowance will be reduced by 2.5 percent for every year difference between the age of which employment was terminated up to the age of 50. Pension eligibility in such cases remains conditional upon fulfillment of the mandatory 25 years of contributions.
Please note at this time the Executive Regulations have not been issued under this law, nor has any other guidance been issued by the authorities.
Michael T. Palmer and Sarah Khasawneh are attorneys with Crowell & Moring in Doha, Qatar. © 2022 Crowell & Moring. All rights reserved. Reposted with permission of Lexology.