Omanis enjoy access to an extremely well organised and comprehensive pensions system, which covers both public and private sector employees. Plans are now under way to extend coverage to include expatriates as well, with the possibility for private pension schemes to fill some of the gaps in the state’s provision. This is likely to benefit the sultanate’s insurers while also driving future growth in capital markets, where there is a desire for more big institutional investors.


The current Omani social security system was born out of a 1991 law that came into full force in 1992. The Ministry of Manpower oversees the system, but administration and day-to-day management of the private sector segment comes under the Public Authority for Social Insurance (PASI).

PASI is working to keep pace with the needs of Oman’s changing demographics. Unlike in many Western and developed Asian countries where average population age is rising and fertility rates are falling, the Omani population remains mostly young. Ministry of Health figures show that in 2006, 37.4% of the population was less than 15 years of age, while 3.6% were over 60. Life expectancy has risen over the previous decade, from 67.4 years in 1995 to 74.3 years in 2006, and while fertility rates have fallen, they remain above Western measures. In 1995 there was an average of six births per Omani woman aged 15-49, but by 2006 this rate had fallen to 3.18. These trends have generally continued, albeit at a slower pace, with 2010 ministry figures showing female life expectancy up to 76.2 years and 70.8 for men in 2010. Some 52.7% of the population was within the 15-49 years age range that year, while the over-60 population stood at 3.83%.

Although the population as a whole may begin to age as the current demographic bulge in 15-49 category approaches retirement, Oman currently has a large, young population base to support its pensions plans, MENU OPTIONS: At the moment, Omani nationals working in the private sector can get pensions coverage from the PASI scheme. Government and public sector employees, meanwhile, are usually covered by one of 11 different plans, ranging from military benefit funds to civil service pension programmes.


PASI is a defined benefit social insurance scheme that not only covers old age, but also work-related disability, death and disease, and occupational injury in general. As of September 2012, PASI insured around 175,000 Omani nationals in the private sector. The scheme is a system of shared contributions between the government, employee and employer. The employee pays 6.5% of his or her basic monthly salary; the employer adds 9.5%, plus an additional 1% covering against occupational injuries and diseases; and the government contributes 2%. PASI completes the package by paying out end-of-service benefits. Minimum and maximum monthly salary estimates are used as a basis, with the upper limit recently increased to OR200 ($521.21). The scheme is also available to Omani nationals working in other GCC countries.

The PASI programme is available to those between the ages of 15 and 59, with both early and normal retirement plans offered. Both men and women can retire early at age 45, provided that a minimum number of employment has been completed. For men, this threshold is 20 years, and for women it is 15. Normal retirement is at age 60 for men, with at least 180 months of contributions, and age 55 for women with at least 120 months of pay-in. A disability pension is payable provided the insured has at least six months of contributions before the onset of the disability, or 12 months of contributions in total, including at least three months before the onset of the disability.

PASI noted in report in early 2012 a major upward shift of its members’ salary bracket breakdown in 2011-12, in line with a general rise in household incomes that year. In February 2011, just 13,675 PASI registrants earned monthly salaries in the OR180-200 bracket ($470-520), but by year’s end, that figure had swollen to 84,576, filled mainly by workers formerly in the lower income bracket. This meant that roughly 48.5% of the PASI members in the private sector workforce were in the OR180-200 bracket by the end of 2011, up from just 7.7% at the start of the year. The next highest monthly salary group, OR200-300, ($520-780) also saw a near doubling in size over the same period, from 23,263 employees to 46,160, according to PASI data.


The option to include foreign residents in the national social insurance programme is being carefully considered as part of a more general reassessment of insurance coverage in the private sector. The inclusion of expats is a challenge given that the 2010 census showed that out of a population of 2.7m, some 700,000 were foreigners. The majority of these workers are employed in the private sector, since, with the exception of a few experts and advisors, public sector jobs are largely reserved for Omanis alone.

The extension of public pension provision is also expected to provide a solution for those Omanis that are self-employed and who are currently excluded by PASI. It is anticipated that the scheme will not cover all the same benefits extended to other groups of beneficiaries, likely leaving out insurance against disease and occupational injury. The pricing of such an adjusted coverage is an issue, however, as many of the self-employed are low-income earners. It is therefore unlikely that a pension plans will be compulsory as it currently is for Omani employees. There also remains a need to introduce portability between schemes, allowing Omanis to increase the amount of premium they pay to receive a larger eventual pension.

Sector Gains

In all this, there may be an increased role for private pension outfits. There are many such providers operating in Oman, but they largely cater to international corporations via schemes that higher-paid employees have as part of their employment packages. These may find room for extension, however, in the years ahead with the reorganisation of PASI. Furthermore, the major wage shift also implies the likelihood of more workers considering private pension plans in future. “Our strategic plan is to expand coverage to include expats in the next five years,” Ahmed Harith Al Busaidi, assistant general manager of insurance affairs for PASI, told OBG.

Market Gaps

Pensions schemes covering government and public sector employees sometimes pay more handsome pensions than PASI. Indeed, PASI figures also show that increased recruitment by the public sector in recent times has led to a decline in scheme members – by 1.8% between 2010 and 2011 – with some private sector employees moving to the public plan.

Filling the gap between public and private sector benefits could be an opportunity for private pensions, with employees paying into both PASI and a second-pillar private scheme. With self-employed insurance likely to be non-compulsory, there may be a market for private providers in that segment as well. Over the long term, the Omani pension system is likely to face similar pressures as in Western markets and grow to adopt that industry’s form. This implies future opportunity for private providers to increase their market share, as reforms of the state systems open more market space.