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Parliament passes new legislation regulating senior government officials’ pensions

Legislation regulating the pensions of senior government officials was passed by Parliament on Tuesday with more than a two-thirds majority. The law reduces the pensions of some officials, while empowering the president to decide on the pensions owed to Administrative Control Authority (ACA) employees.

Member of Parliament Galila Osman, who serves on the parliamentary Manpower Committee, says that 417 out of 596 MPs voted in favor of the legislation, which introduces amendments to three earlier laws: the Administrative Control Authority Law 54/1964, the Social Insurance Law 79/1979, and a third law (Law 28/2018) on the salaries of the vice president, the speaker of Parliament, the prime minister and his deputies and ministers. Initially passed in April, Law 28/2018 now regulates the financial treatments of the parliamentary speaker, the prime minister, Cabinet members and governors, and their deputies.

Under this legislation, which is yet to be ratified by the president, the ACA law will be amended to empower the president to decide which wage components are to be included as part of the pensionable salaries of the authority’s employees. The law does not put any caps that the president must abide by in issuing his decree, even the maximum wage, MP Yasser Omar says, and pensions will not include retirement compensations offered by the ACA to its employees.

Omar, the secretary of Parliament’s Planning and Budget Committee, lays out how the pensions of those employed by the ACA, the government’s auditing bureau, are determined. Article 64 of the Administrative Control Authority Law sets the pension salary of an ACA employee at the maximum percentage of the last salary received by the employee at the time they are retired. The second paragraph of the article gives the ACA’s Personnel Committee the authority to include an employee’s raise as part of their pensionable salary.

The legislation also decreases the pensions of the parliamentary speaker, prime minister, ministers and governors and their deputies. Instead of a fixed 80 percent of the maximum wage (LE33,600), the amount is now based on the number of years served in the position, with a minimum of 25 percent of the official’s salary as it was at the time they left their post. This scheme is to be applied retroactively from April 24.

Law 28/2018, which regulates the salaries and pensions of these officials, was passed by Parliament on April 16 and ratified by the president on April 23. It came into effect the following day. The law bumped up the net salaries of the legislature’s speaker, the prime minister and his deputies, ministers and governors to the full maximum wage (LE42,000), and the net salaries of ministers and governors’ deputies to 90 percent of the maximum wage. It also increased their pensions to 80 percent of each official’s final salary or remuneration.

Osman tells Mada Masr that Tuesday’s law is intended to correct a part of the April legislation, which was met with criticism from a number of MPs. A government source, speaking on condition of anonymity, previously told Mada Masr that over a month after its passage, MPs voiced opposition to Article 4 of Law 28/2018, stating that it disregarded seniority

It stated that those who have occupied the posts outlined in the law are entitled to a pension of 80 percent of the salary they were receiving up until the date they left their post. It did not, however, take into account the number of years spent in the post, which would entitle a minister who served one month to the same pension as one who served for five years, for example. According to Osman, the April law sets forth a means by which to calculate pensions taking into account the number of years served.

According to Osman, a minister who spends 10 consecutive years in office will now receive 80 percent of their final salary, while a minister who serves three years will receive 30 percent of their final salary. Officials mentioned in the law who serve for less than three years will receive a minimum pension of 25 percent of their final salary, Osman adds.

The new calculations will apply retroactively from April 24, according to Osman, to ensure that no officials who left their post after the ratification of the first law will receive pensions calculated using the old guidelines. She mentions, as two examples, former Public Enterprise Sector Minister Khaled Badawy and former Local Development Minister Abu Bakr al-Guindy who left the government only four months after they were appointed. Under Law 28/2018, each of them is entitled to a pension salary of LE33,600, which is what 80 percent of the maximum wage amounts to. When the president signs off on this new law, each of them will only receive LE10,500, which is 25 percent of their final salary.

“The purpose of this law is to decrease pensions for some of those outlined, to avoid straining the state’s treasury by dispensing sums that are too large,” Speaker Ali Abdel Aal said during the parliamentary assembly during which the law was passed. The speaker added that under the new legislation, the 40 ministers from former Prime Minister Sherif Ismail’s Cabinet who were removed from their posts in early June, and other officials who were removed in the same reshuffle, will now receive pensions equivalent to 25 percent of their final salaries, the minimum pension stipulated for ministers, as they served for less than three years.

Ahead of Tuesday’s vote, Abdel Aal urged members of Parliament to take two things into account. First, he said, the law was drafted and submitted by the government, even though its failure would be in the interests of Cabinet members and other officials. Secondly, he noted that the bill would save the state treasury money, and that it was prompted the group addressed by the bill taking into consideration “the difficult circumstances that the country is going through.”