Businessmen propose old-age insurance scheme

‘Lebanese Businessmen’ calls for distinguishing between old-age security and retirement health coverage

The Lebanese Businessmen Association (RDCL) released, in a news conference on Tuesday (September 27), a draft on the old-age security system. The bill highlighted the need to differentiate between the old-age indemnity system and the retirement health coverage system.

“It is vital to distinguish between the two, people over the age of 65 must also enjoy a proper health coverage (in addition to the retirement income) so they would not spend their monthly income on medical treatments,” said Fouad Zmokhol, the President of the Businessmen Association.

The draft law is based on achieving a balanced ‘Replacement Ratio’ formula, which represents the retirement income or Social Security benefits relative to preretirement earnings. The draft aims at securing the largest ratio possible while ensuring that the wage at retirement represents 40 percent of the last wage earned.

The draft suggests dividing the retirement fund into three parts: Low-income individuals with wages equivalent to the minimum wage), average-income individuals, and high-income individuals. The average-income and the high-income divisions would be determined upon a ceiling to be identified later through consultations with the authorities and the private sector. The ceiling would be measured as a multiple of the minimum wage.

According to the scheme, subscriptions to the first two divisions are mandatory for all workers under the age of 35, and optional for those with ages ranging between 35 and 55. Subscribing to the third division of the fund would be optional, encouraged through tax incentives for workers and employers.