The Unfolding Decline of Bahrain's Social Insurance Organization
2023-10-02 - 1:22 p
Bahrain Mirror (Exclusive): In a disconcerting turn of events, the Social Insurance Organization in Bahrain, one of the largest custodians of public funds, finds itself forced to liquidate its assets to meet pension obligations. This dire situation calls for immediate reform, as the organization, despite its substantial revenue streams from deductions taken from Bahraini salaries, grapples with administrative shortcomings and decisions seemingly influenced by those in positions of power and wealth.
The @bahrainiguru account, specializing in economic and investment matters, conducted a thorough analysis of the financial report for the year 2022 from the Social Insurance Organization, uncovering troubling findings.
Firstly, the organization's assets dwindled by half a billion dinars. Secondly, it incurred investment losses amounting to approximately 92 million dinars. Thirdly, the report revealed a staggering increase in the financial deficit of the Insurance Organization, surging by 820 million dinars, culminating in an actuarial deficit totaling 10.6 billion dinars.
Another significant revelation in the report pertains to the sale of the organization's investment assets, totaling 526 million dinars, while only 190 million dinars were allocated for asset purchases. Deposits increased by a mere 10 million dinars, underscoring the decline in investment assets-a decrease equivalent to 326 million dinars.
The reason behind this decline becomes apparent: the 326 million dinars represent investment assets liquidated to meet pension obligations for retirees and to fund new pensions under "optional" and "compulsory" retirement programs. The fund can no longer sustain these payments from contributions or investments.
This situation highlights the profound imbalance in the organization's financial state. Despite years of selling off fund assets, the deficit continues to escalate. In the span of just two years, the management has liquidated over 300 million dinars, all of which went toward retirees and retirement programs. Last year alone, the financial deficit swelled by approximately one billion dinars, reaching a staggering 10.6 billion dinars.
What is unfolding is clear evidence that the fund is essentially eroding itself. If the current pace of asset liquidation and sales persists, the organization's substantial assets, valued at 2.6 billion dinars, could be depleted within a mere four years, according to available data.
The most alarming outcome for any pension fund is to deplete its assets to fulfill pension obligations. This unfortunate reality underscores the urgent need for genuine public oversight and immediate administrative reforms to halt the precipitous decline of one of the nation's most crucial public financial institutions.