December 2010 - Nothing beats learning from the experience of others. With this in mind and an appetite for knowledge, a group of Iraqi officials involved in their country’s pension reform process headed to Cairo to learn from their Egyptian counterparts how to implement Iraq’s long-needed reform of the pension system.
The Iraqi’s learning visit, aimed at benefiting from Egypt’s recent pension reform experiences, is one of the activities under Iraq’s Pension Reform Implementation Support Technical Assistance (PRISTA), a World Bank-supported technical assistance program launched in February 2010 and financed by the Iraq Trust Fund.
The main objectives of the visit were to expose the Iraqi officials to the provisions of the Egyptian Pension system in order that they might learn from actions in progress in the Egyptian system.
Ali Owaid, Chairman of the National Board of Pensions (NBP), was an eager student. “After four days of field visits and listening to our Egyptian colleagues, we look forward to building on this pension reform experience and lessons learned,” he said. “This will help us propose our own recommendations and next steps and overcome current challenges and difficulties in Iraq”.
The Iraqi delegation also included key staff members involved in the pension reform process from the State Pension Fund (SPF), the Pensions and Social Security Department (PSSD), and the Pension Reform Management Office (PRMO).
“Such learning and knowledge sharing visits can be very helpful,” said Ghassan Alkhoja, World Bank Senior Operations Officer and PRISTA Task Team Leader. “What our Iraqi counterparts are seeing here is helping them build capacity to implement the provisions of a new pension law, undertake actuarial analysis of the pension scheme, and address potential challenges of pension reform.”
This opportunity is not the first of its kind for an Iraqi delegation under PRISTA. Iraqis had visited the Social Security Corporation in Jordan, as part of knowledge sharing and South-South exchange between Iraq and Jordan. This also included knowledge sharing and exchange in the education sector also facilitated by the World Bank.
For five years, the World Bank assisted the Egyptian Government through a multiyear pension reform program developed in two phases. The first involved technical assistance in developing a framework for pension reform and drafting the new pension law. The second focused on the refinement of the reform concept in line with consultations with various stakeholder groups in specific areas. In May 2010, Egypt enacted a new Social Insurance Law that introduced a systemic reform that represents a landmark in the Middle East region.
“During our partnership with the World Bank, we were supported in our agenda of reforms and the technical assistance catered to our national objectives. We developed a comprehensive new design reform which the World Bank regarded as very suitable to developing countries,” said Dr. Mohamed Maait, Egypt’s Deputy Minister of Finance during his meeting with the Iraqi delegation.
Iraq’s Pension Reform Process
In Iraq, efforts to reform the pension system started soon after April 2003 and resulted in the passing of Law 27/2006 in January 2006. Unfortunately, its implementation was suspended as it was widely deemed unsustainable and did not benefit from international experience. Subsequently, the law was amended in December 2007 as the Unified Pension Law to improve financial sustainability and alter the design of public sector pensions in line with good international practices.
The Unified Pension Law also stipulates the unification of public and private sector pension schemes and created the National Board of Pensions (NBP) and the State Pension Fund (SPF), to replace the old State Pension System.
On the other hand, Egypt’s pension reform process demanded enormous efforts to substantially increase transparency and inclusive dialogue with various stakeholders. Furthermore, Egypt’s recently reformed system is expected to ensure lessening the fiscal burden while providing more extended benefits to the elderly and easy quality and accessible services through a comprehensive mechanization process and making services available online.
“It would be useful for the Iraqi team to be introduced to the Egypt’s Social Insurance System and learn from their efforts to achieve greater inclusion, increased transparency and fiscal sustainability,” said Gustavo Demarco, World Bank Task Team Leader of Egypt’s Pension RTA.
“Implementing a new pension law in a very short time frame poses multiple challenges and learning from Egypt’s experience is a real value.”
In addition to the knowledge experience this visit has established a network that will hopefully serve both countries over time.
“We are pleased to provide any support and help to our Iraqi brothers during the current reform process and we stand ready to continue sharing experiences and lessons learned in support of wider Arab integration,” Dr. Maait said in bidding farewell to the Iraqi delegation.