Kuwaiti retirees must provide clearance certificates before switching pension banks

The Public Institution for Social Security (PIFSS) in a move aimed at protecting loan guarantees and ensuring uninterrupted pension payments, has introduced a new requirement for retirees and pension shareholders wishing to transfer their pensions from one bank to another.

Under the updated procedure, retirees must now provide a clearance certificate from their current bank before switching the disbursement entity.

The step is intended to ensure that banks retain control over pension-backed loans and mitigate potential risks related to unpaid installments, reports Al-Rai daily.

Previously, retirees could freely transfer their pension accounts without needing any clearance, a flexibility that, while convenient, raised concerns for banks regarding loan repayment guarantees.

Sources indicate that this unrestricted process sometimes gave retirees leeway to delay payments, reducing banks’ confidence in pension-backed lending.

From a bank’s perspective, the new clearance requirement addresses default risks among retired borrowers. By verifying that retirees have no pending financial obligations with their current bank, lenders can confidently extend consumer and housing financing.

Analysts predict that the change could also lead banks to increase the upper age limit and loan ceilings for retirees, potentially extending repayment schedules up to 73 years for qualified clients.

The official data shows that the total number of retirees in Kuwait reached 203,400 by June 2025, up from 195,160 in December 2024. The rising proportion of younger retirees in their 40s makes them attractive candidates for housing and consumer loans.

A Kuwaiti retiree who meets the Central Bank of Kuwait’s conditions and receives a pension of 2,700 dinars is eligible for up to 95,000 dinars in total financing: 25,000 dinars for consumer loans and 70,000 dinars for housing loans, with a monthly installment of 810 dinars.

Sources emphasized that the new procedure balances retirees’ rights to transfer their pensions with banks’ need for financial security, likely enhancing retiree access to credit while maintaining the stability of the banking sector.