Social Security

Reforming the End of Service Indemnity scheme in Lebanon’s private sector into a pension system for old-age, disability and survivors

The project aims to establish a pension system for private sector workers to provide periodic benefits in case of old-age, disability and death.

The social protection system in Lebanon is described as having low coverage rates and lack of coordination. Around 80% of the population above the age of 65 have no retirement benefits nor healthcare coverage, whilst the National Social Security Fund (NSSF) covers only 30% of the labour force. Also, an employment fund to protect those who lose their jobs or are unable to find jobs is yet to be created. In general, insufficient social protection, the dispute around social contributions and lacking supportive regulations continue to influence a large segment of the population (ETF, 2015). Thus, many rely on unsustainable incomes including informal employment and family support, and will continue to be trapped in the cycle of poverty.

Lebanon is the only country in the region and one of the 16 countries out of 179 countries worldwide which has not yet established a pension scheme that would provide periodic benefits for workers in the private sector in case of old-age, disability and death. The absence of such a system entails a lack of economic security for its population during old age, and in case of disability and death of the breadwinner.

Following an official request from the Minister of Labour at the end of 2012, the ILO carried out an actuarial valuation of an eventual social insurance scheme that would replace the present end-of-service indemnity. Subsequently, an in-depth assessment on the compatibility of the new proposed pension law with ILO social security standards, basic social security principles and international best practices, was developed and discussed with tripartite stakeholders in 2015. Due to continuous change in government, the reform was put on hold. In 2017/18, the ILO received an official request from each of the Minister of Labour, the Director General of the National Social Security Fund, and the President of the General Confederation of Lebanese Workers of its social partners to support reform of the pension system

In this regard, the ILO designed a tailor made project to directly respond to the needs and requirements of its stakeholders, and support them in moving towards a more comprehensive social insurance system that covers private sector workers in Lebanon and their family members. Accordingly, ILO’s interventions will be focused on technical support, including a comprehensive actuarial valuation of alternative reform options, a legal assessment of the proposed social security law of 2018, proposed legal amendments following options to be chosen by tripartite stakeholders, and a road map for the implementation of the new pension system.

Objectives


Thus under this project, ILO’s are to: 
  • Complete reform of the end-of-service indemnity (EOSI) scheme to establish a pension system for private sector worker that is fully compliant with International Social Security standards.
  • Support government and social partners to develop innovative modalities towards extending social protection coverage, including health and maternity protection, to informal sector workers particularly to reduce the number of unprotected and vulnerable workers.
  • Support government-wide dialogue for the establishment of a comprehensive protection strategy to enhance coordination and coherence between different contributory and non-contributory branches of the social protection system with a view towards achieving universal coverage in line with ILO Recommendation No.202 on National Floors of Social Protection.

Outcomes

  • Outcome 1: Comprehensive reform of the end-of service indemnity provided by the NSSF into a pension scheme to increase coverage to people and to provide adequate financial sustainable benefit
  • Outcome 2: Comprehensive universal health care coverage extended to all people, particularly workers in the informal economy

Main Activities


Outcome 1 Activities
  • Activity 1- Capacity building workshops for tripartite stakeholders on social security principles, policies, best practices examples and on ILO
  • Activity 2- Developing a comprehensive actuarial valuation of alternative reform options.
  • Activity 3- Developing informative awareness raising materials on the different reform options, and carrying out several consultative meetings with tripartite stakeholders.
  • Activity 4- Comprehensive policy recommendations for the reform of the social security system based on the actuarial valuation.
  • Activity 5- Preparing a legal assessment of the proposed social security law of 2018, with proposed legal amendments.
  • Activity 6- Develop a road map for the implementation of a pension scheme.
Outcome 2 Activities
  • Activity 1- Develop a policy brief on extending universal health care and extension of health insurance to vulnerable workers in Lebanon.
  • Activity 2- Roadmap for the establishment of a national policy dialogue platform on universal health care and extension of health insurance to vulnerable workers in Lebanon.
  • Activity 3- Awareness raising campaign on extension of social health protection.
  • Activity 4- Study tour to selected countries to share good practice examples.