Bahrain's pension fund authority faces collapse

Two of Bahrain's landmark institutions, the Pension Fund Authority (PFA) and the General Organisation for Social Insurance (Gosi), are going bankrupt, a senior government official told parliament. The parliament appointed an investigating committee to probe what went wrong, Speaker Khalifa Al Dahrani said yesterday.

"I say this to you with all honesty, both funds are bankrupt," Sheikh Isa bin Ibrahim Al Khalifa, Director General of GOSI told parliament on Tuesday, according to a report in the semi-government daily, Al Ayam.

He was addressing MPs' questions on a proposal to merge both funds.

Sheikh Isa said Gosi was looking for ways to save the fund. A financial expert, from Cyprus, has been appointed to "estimate the time left for Gosi to survive and ways of reviving its resources," he said, urging the MPs to "be patient."

He said Gosi's fund inflow and outflow is expected to be equal in 2006, which means the fund is in trouble, he explained. "By 2012, Gosi will be losing large amounts of money and in 2023 it is expected to shut down after declaring bankruptcy," he said.

Meanwhile, the PFA's reserves now stand at 900 million dinars. "But if employees continue to get large benefits our reserves will decline and many will suffer in the future," said Director Rashid Al Meer.

The Minister of State for Parliamentary Affairs, Abdul Aziz Al Fadhel, who was surprised by the revelations tried to assure the MPs the government "will not allow either fund to go bankrupt." "Gosi and the PFA are not and will never be bankrupt," he said.

But the MPs decided to form a committee of six members, to look into the matter. It is the first time that the House of Deputies, elected in October 2002, has appointed an investigation committee to probe a governmentagency.

The committee should submit a report of its findings to the house in six months.