West Bank and Gaza Public Expenditure Review - The Palestinian Pension System: A Roadmap for an Unfinished Reform - Final Report - 12 September 2023

Jul 19, 2026

Final report for the West Bank and Gaza Public Expenditure Review, focusing on the Palestinian pension system and the path for completing an unfinished reform. Builds on prior 2016 PER pensions analysis by updating data, financial assessment, and fiscal projections, then presenting new policy recommendations. Describes transition from fragmented arrangements to a unified scheme, highlights demographic pressures, and evaluates benefit imbalances in both defined benefit and defined contribution components. Discusses financing assumptions from the 2006 reform and provides reform conclusions and an annexed methodology.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages56

Reading Time2 h 21 min

Executive Summary

Background

Institutional and Operational Setup

Socio-economic Impact and Policy Challenges

System Finances

Fiscal Simulations: Status-quo and Parametric Reforms

Conclusions and Outline of the Proposed Reforms

Annex I. History of the PA’s Policy Initiatives and Reforms in Pensions

Annex II. Modeling Methodology Overview

Public Pub lic Disc losure Authorized WEST BANK AND GAZA PUBLIC EXPENDITURE REVIEW The Palestinian Pension System: A Roadmap for an Unfinished Reform Final Report 12 September 2023 Acknowledgment This report was prepared by Oleksiy Sluchynsky (Senior Economist, WB), Lidiia Tkachenko (Demography and Social Insurance Specialist, WB Consultant), and Eimar Coleman (Senior Institutional and Social Security Reform Adviser, WB Consultant) . The PROST simulations were conducted by Lidiia Tkachenko. Nur Nasser Eddin (Senior Economist, WB) and Luan Zhao (Senior Economist, WB) provided valuable contribution to the report. The team appreciates feedback on this report received from the Ministry of Finance and from the Palestinian Pension Authority. The team would like to thank Ayman Aldoqi (General Director of Administration and Planning, PPA) and his colleagues for their invaluable guidance, feedback, and coordination. The management and staff of the PPA generously contributed their time and provided operational data as well as answers to SIAD questionnaires at the request of the World Bank team. The views expressed in this report are the responsibility of the authors. They do not necessarily reflect the position of the institutions they represent. Contents Acknowledgment ......................................................................................................................2 Executive Summary..................................................................................................................4 1. Background ......................................................................................................................5 2. Institutional and Operational Setup ..............................................................................5 3. Socio-economic Impact and Policy Challenges .............................................................8 4. System Finances .............................................................................................................12 5. Fiscal Simulations: Status-quo and Parametric Reforms ..........................................17 6. Conclusions and Outline of the Proposed Reforms ....................................................24 Annex I. History of the PA’s Policy Initiatives and Reforms in Pensions .........................30 Annex II. Modeling Methodology Overview ........................................................................33 Part A1 . Assumptions...........................................................................................................33 Part A2 . PROST Model Overview .......................................................................................38 Annex III. Administrative Diagnostics of the PPE ..............................................................41 A1 . Internal Governance ......................................................................................................41 A2 . Investment and Management of Funds .........................................................................46 A3 . ICT Management and Data Policies..............................................................................46 A4 . Identification and Registration ......................................................................................49 A5 . Contribution Collection.................................................................................................50 A6 . Benefits Management ...................................................................................................51 A7 . Grievances-Appeals and Complaints ..........................................................................53 A8 . Communications ...........................................................................................................53 Summary of Observations and Recommendations ..............................................................54 Executive Summary

FAQs

What is the purpose of this final report within the Public Expenditure Review?

It updates the 2016 pensions analysis by compiling current issues, collecting new data, refining financial analysis and fiscal projections, and providing fresh policy recommendations for completing the pension reform.

How is the Palestinian pension system described in terms of structure and transition?

It is transitioning from fragmented arrangements to a unified pension scheme that is open to non-government civil society participation, with legacy schemes largely phased out but still affecting remaining beneficiary groups.

What key issues are identified for sustainability in the defined benefit and defined contribution components?

The defined benefit component is financially unbalanced because benefit promises do not match contribution rates and retirement ages, including early retirement privileges. The defined contribution component has not effectively provided retirement income security, operates on an accrual basis with zero nominal interest, and pays only the face value of total contributions as a lump sum.

Jul 19, 2026

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