Iraq: Changes to the social security retirement program

Employer Action Code: Act

Iraq’s new Social Security Law No. 18 took effect in late 2023, replacing Social Security Law No. 39 of 1971. It aims to improve the financial sustainability of the program by significantly increasing the social security contribution rate applicable to all employees other than those in the oil and gas sector (with the contribution increase funded by the government for Iraqis and by employers for foreign nationals). The law also aims to extend social security coverage to more of the working population, including informal employees and the self-employed. (Companies and employees in the oil and gas industry are covered by the same program and continue to be subject to contribution rates of 25% and 5% of covered pay, respectively.)

Key details

• For employees outside of the oil and gas sector, an additional contribution of 8% of covered pay is payable to social security. For Iraqi nationals, the government funds this new contribution; for foreign employees, the employer funds it (unless the employee is recognized by the social security agency as being covered by his or her home system and so does not participate in the Iraqi system). The employee contribution rate remains unchanged at 5%; prior to the new law, the employer contribution rate was 12% for all such employees (Iraqi or foreign).
• Covered pay for contribution purposes now consists of base pay and all allowances (previously only fixed allowances in excess of 30% of base pay were included); it is also now subject to a cap of five times the minimum wage (previously uncapped).
• The social security retirement pension may still be claimed at age 60 (men) or age 55 (women) with at least 20 years of insured employment. The pension also now may be claimed at age 63 (men) or age 58 (women) with at least 15 years of insured employment or at age 50 (men and women) with at least 30 years (men) or 25 years (women) of insured employment. The previous rule allowing commencement of the retirement pension at any age with at least 30 years (men) or 20 years (women) of insured employment has been eliminated.
• Employers must now pay a one-time registration fee of 2 million Iraqi dinars (IQD) for each non-Iraqi employee participating in social security (IQD 750,000 for such employees who were already in Iraq as of December 1, 2023). Previously there was no registration fee.

Employer implications

Employers should review the new law and implementing regulations as necessary to ensure compliance. Note: The law was approved by parliament in May 2023 but not signed into law until December 3, 2023.

Contact

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Michael Brough

Senior Director, Integrated & Global Solutions

email Email phone +971 50 189 5816

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