Bahrain MPs back oil levy to fund pension increases -

Bahrain's Council of Representatives approved a proposal on Tuesday to direct a levy on crude oil exports into the country's pension and social insurance fund, with the stated aim of restoring annual pension increases. According to the council's record of its 10 November session, the measure was approved in amended form and referred to the government. Under the proposal, nothing is deducted when crude sells at $40 a barrel or below. Above that level, $1 per barrel would be charged, rising to $2 per barrel above $80. The deduction applies to crude exported outside Bahrain, and proceeds would transfer directly to the fund. Al Bilad reported that the law would take effect from the start of the financial year after its entry into force, with the finance and national economy minister issuing implementing decisions within three months.

The proposal was sponsored by MPs Khalid Saleh Bouanaq, Hisham Al Awadhi, Ahmed Al Salloom and Zainab Abdulamir. The Services Committee recommended approval unanimously, and the Legislative and Legal Affairs Committee found it constitutionally sound. A parliamentary studies and training department applied both rates to past export years. Figures reported by Akhbar Al Khaleej show estimated yields of BD19.83 million (2023), BD18.63 million (2024) and BD19.98 million (2025) at the lower rate, and roughly double those amounts at the higher rate. These are estimates of what the levy would have raised, not forecasts, and the published summary does not disclose the export volumes used.

The scale of the levy is small relative to the fund's shortfall. MP Eman Shuwaiter told the chamber that net unfunded liabilities stand at about BD14.5 billion, citing studies, as reported by Al Ayam. Against that figure, the maximum annual yield of about BD40 million represents roughly 0.28%. Proposers describe the levy as a relatively stable revenue stream that could reopen the door to annual increases rather than a solution to the long-term shortfall. Shuwaiter framed the issue as social security and fairness between generations.

The Financial and Economic Affairs Committee supported raising the fund's resources but warned that activating the mechanism could increase the state budget deficit, according to Al Bilad and Akhbar Al Khaleej, citing its economic adviser. Because oil revenue belongs to the state, earmarking part of it for pensions shifts the cost to the budget unless spending falls or other revenue rises.

The proposal follows a series of pension changes. According to benefits consultancy Lockton, automatic annual pension increases of 3% were suspended in 2020 and 2021 during the pandemic. Law No. 14 of 2022, published in the official gazette on 18 April 2022, ended automatic increases and made any rise conditional on the fund running a surplus, while adding BD60 a month to old-age pensions backdated to 1 January 2021. That package also raised employer contributions toward 20% by 2028, lifted employee contributions to 8% from 2023, moved women's normal retirement age from 55 to 60, and extended the contribution record for a full pension from 180 to 240 months. MP Mohammed Janahi argued that extra revenue could reduce pressure to raise the retirement age, increase contributions or cut benefits, and called for strict spending checks, greater investment transparency and regular actuarial reviews. Shuwaiter said the 2022 changes had already affected citizens while shortfalls persisted. The levy remains a parliamentary proposal referred to the government, not enacted law.