January 4, 2022
Shedding light on the long-awaited Executive Regulations of the Social Insurance Law
With a focus shifted towards digitalizing and modernizing public services, the much-anticipated Executive Regulations of the Social Insurance Law have been enacted and provide the framework for an e-based filing system in Egypt. The primary goal of the new social insurance system is to provide a unified regulatory framework for the State’s subjects and government bodies. From an economic perspective, one of the new aims of the social insurance system is to ensure that pensioners receive a pension commensurate with the basic standard of living and, at the same time, proportionate with the State’s inflation rate.
On 28 September 2021, the Prime Minister issued Decree No. 2437 for the year 2021 enacting the Executive Regulations of the Social Insurance Law (the “Executive Regulations”). The Executive Regulations comprehensively set out the main social insurance and pensions regime, procedures and applicable exemptions, including the minimum and maximum salaries on which social insurance contributions are made.
Below are the key highlights of the Executive Regulations:
Determining Social Insurance Contributions
The Executive Regulations created a standard to determine the amount of contribution made. This standard is based on a minimum and a maximum salary. The minimum monthly salary on which social insurance contributions are made as of 1 January 2020 is EGP 1,000 and the maximum salary on which social insurance contributions are made is EGP 7,000. Both the minimum and maximum salaries are to be increased by 15% each year for seven years. Thereafter, they are to be increased annually by the rate of inflation. Increases are to be rounded to the nearest EGP 100.
In addition, the Executive Regulations provide a list of “excluded allowances” which are allowances that can be excluded from the salary on which social insurance contributions are made. However, such excluded allowances cannot exceed 30% of the salary on which social insurance contributions are made.
E-filing system for Insured Persons
The Executive Regulations task the National Organization for Social Insurance (the “NOSI”) with creating an e-file for each individual that falls under the social insurance system umbrella, and that contains all their relevant data and information. Employers of the private sector are obliged to withhold all social contributions due from employees and remit them on their behalf electronically to NOSI. In addition, Employers will eventually be obliged to send data and forms to NOSI electronically.
Setting the Timing of the Pension Age Increase
The new Social Insurance Law stated that the pension age shall gradually increase from the current retirement age of 60 until it reaches 65 in 2040. The NOSI website, however, provides a timetable for such increase. In accordance with the website, the retirement age shall increase by one year every 2 years as of 1 July 2032, to reach the age of 65 by 1 July 2040.
On 28 September 2021, the Prime Minister issued Decree No. 2437 for the year 2021 enacting the Executive Regulations of the Social Insurance Law (the “Executive Regulations”). The Executive Regulations comprehensively set out the main social insurance and pensions regime, procedures and applicable exemptions, including the minimum and maximum salaries on which social insurance contributions are made.
Below are the key highlights of the Executive Regulations:
Determining Social Insurance Contributions
The Executive Regulations created a standard to determine the amount of contribution made. This standard is based on a minimum and a maximum salary. The minimum monthly salary on which social insurance contributions are made as of 1 January 2020 is EGP 1,000 and the maximum salary on which social insurance contributions are made is EGP 7,000. Both the minimum and maximum salaries are to be increased by 15% each year for seven years. Thereafter, they are to be increased annually by the rate of inflation. Increases are to be rounded to the nearest EGP 100.
In addition, the Executive Regulations provide a list of “excluded allowances” which are allowances that can be excluded from the salary on which social insurance contributions are made. However, such excluded allowances cannot exceed 30% of the salary on which social insurance contributions are made.
E-filing system for Insured Persons
The Executive Regulations task the National Organization for Social Insurance (the “NOSI”) with creating an e-file for each individual that falls under the social insurance system umbrella, and that contains all their relevant data and information. Employers of the private sector are obliged to withhold all social contributions due from employees and remit them on their behalf electronically to NOSI. In addition, Employers will eventually be obliged to send data and forms to NOSI electronically.
Setting the Timing of the Pension Age Increase
The new Social Insurance Law stated that the pension age shall gradually increase from the current retirement age of 60 until it reaches 65 in 2040. The NOSI website, however, provides a timetable for such increase. In accordance with the website, the retirement age shall increase by one year every 2 years as of 1 July 2032, to reach the age of 65 by 1 July 2040.
