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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(CONTINUED)
17 EMPLOYEE PENSION LIABILITIES (Continued)
ii) On retirement, the eligible retired employee is entitled to 2.5% under the old staff retirement plan or 1% under the hybrid plan in the Define Benefit (“DB”) component, of the Weighted Highest Average Remuneration (“WHAR”) (as defined by the pension committee) for each year of pensionable service and limited to a maximum of 30 hijri years.
iii) 10% of Bank and its Affiliates' contribution of 25.9%, and 5% of employees' contribution of 11.1%, are used to fund the Define Cost (“DC”) component of the hybrid plan. The accumulated fund and its investment returns will be paid as retirement lump sum benefits to the participants in the hybrid plan.
iv) Benefits payment upon early retirement, disability benefits, termination benefits, pre-retirement death or post retirement death benefits are also paid as determined by the Pension Committee.
Staff Retirement Medical Plan (SRMP)
Effective 1st Muharram 1421H (corresponding to April 6, 2000), the Bank established the medical benefit scheme for retired employee via the BED resolution dated 18 Shawwal 1418H (corresponding to February 15, 1998). This was extended to eligible staff members of the Bank’s Affiliates i.e. for SPP. The Bank and its Affiliates at rate 1% and the staff at a rate 0.5% of the basic salaries respectively fund the SRMP. The purpose of the SRMP is to pay a monthly amount to eligible retired employee towards their medical expenses.
The entitlements payable for each retired employee under the medical plan is computed according to the following formula:
WHAR (as defined by the pension committee) X contributory period (limited to a maximum of 30 hijri years) X 0.18%.
Benefits payment upon early retirement, disability benefits, termination benefits, pre-retirement death or post retirement death benefits are also paid as determined by the pension committee.
Retirees Medical Solidarity Fund (RMSF)
In February 2019, the BED approved, establishment of the Retirees Medical Solidarity Fund (RMSF) which would provide new medical coverage benefits for IsDB Group staff future retirees. Under the proposal, active staff members who have at least 10 years of service period before their normal retirement age from January 1, 2019 will automatically fall under RMSF. Those staff members who do not meet the minimum service period threshold will be offered the option to join the new Fund.
The plan is to be funded jointly with contributions equal of 4% of the pensionable salary by the Bank and the active staff; and contribution by future retirees equal to 4% of their pension salary (before commutation).
Starting January 2021, the Bank’s and Employees’ contributions of the staff mapped under the new scheme have been transferred to RMSF.
106 ICD ANNUAL REPORT 2021