System failure: Tens of thousands cut off from pensions, social insurance services

The problems of the new social insurance and pensions system will all be fixed by August, as promised by Prime Minister Mostafa Madbuly after Thursday’s Cabinet meeting . His remark extended, yet again, the deadline by which officials have promised to fix disruptions that have flooded the pensions system, meant to serve over 11 million beneficiaries of one of the state’s core social support programs, since its roll-out in late March. At the center of the crisis is one of the state’s most ambitious digital transformation overhauls: the migration of tens of millions of insurance records from a paper-based system to a fully digitized network linking social insurance databases with other government agencies and services. The old system was completely phased out by March, but, in the process, tens of thousands of citizens have been cut off from the income they depend on to make ends meet. Officials have repeatedly insisted that the system itself is functioning normally, acknowledging only limited slowdowns in some services. Behind those assurances, however, households’ requests to open new pension files and modifications to existing records have continued to pile up, prompting backlash from pensioners and workers’ advocacy groups as well as from parliamentarians who have accused authorities of downplaying the scale of the problem. With the government neglecting to plan and prepare a fallback mechanism to support households left behind by the transition, many have now been left waiting for several months, cut off from pensions and social insurance services and waiting for the government’s promises to fix the issues to translate into reality. *** At the inaugural International Conference on Management and Innovation in Social Security held in Cairo in February 2025, the National Organization for Social Insurance (NOSI) chair Gamal Awad announced that Egypt is set to launch its new digital social insurance and pensions system. Almost a year later, the Cabinet announced in a statement that the platform’s first phase was ready for launch, with an aim to provide 40 digital services, with another 55 slated to follow within six months. The new system is the product of a reform process years in the making, introduced under the 2019 Social Insurance and Pensions Law, which consolidated multiple social insurance schemes under a single framework to be administered by the NOSI. A senior NOSI official told Mada Masr, on condition of anonymity, that the system, which they said was developed by a foreign software company under the supervision of “sovereign bodies,” was piloted between January and March in four governorates before being rolled out nationwide by the end of March, at which time the old system was completely retired. Under the old system, applicants were required to submit documents that would be compiled into physical files. The new system digitizes existing and new records and automatically links them to agencies such as the tax authority and the Health Ministry, eliminating the need for citizens to collect paperwork from different government offices. Problems began to emerge immediately after the transition began. An initial malfunction that prevented people from withdrawing their pensions through the organization’s payment machines was eventually resolved, according to the senior official. But services involving updates to insurance records continued to face disruptions. February 24 was the cut-off point, according to Kamel al-Sayed, the deputy head of the Pensioners Syndicates. Transactions on the system linked to new registrations or modifications to existing insurance records made after that date began piling up. The problem, he said, is that the new system is unable to register new beneficiaries. For those cases, “no pensions are being paid, no pension inheritance cases are being processed and no documents are being issued. It’s as if the insurance authority is closed,” he told Mada Masr in late April. The NOSI nevertheless maintained that the system was functioning, acknowledging only “slow performance” in some services which it attributed to normal challenges associated with rolling out a large-scale digital system handling vast quantities of data and users. It stressed that the system had undergone testing over the course of a year and a half before its launch. Even as it publicly downplayed the extent of disruptions, the organization was racing to address them behind the scenes. Officials were aiming to resolve issues before May to avoid further complications ahead of the next pension payment cycle, the NOSI official told Mada Masr in April. But early May found Awad still assuring lawmakers that a fix was imminent, pledging in a meeting with Parliament’s Labor Committee that the system’s problems would be resolved within two weeks, MP Ahmed Bilal al-Barlasy told Al-Shorouk. When the deadline expired, Awad failed to attend a follow-up committee meeting. “Today, it wasn’t the problems that disappeared, but Major General Gamal Awad,” Barlasy said at the time. Perhaps the organization’s clearest acknowledgement that significant numbers of citizens were barred from payments and services came on May 21. The organization said in a statement that 76,000 pending pension claims had accumulated between February 24 and May 21. Of those, it said 42,000 people had already submitted all the required documents, while the rest were still missing paperwork. In the same breath, it insisted that the new system is functioning normally. Because the new system was yet to complete processing these pension applications, the organization announced that it would pay the tens of thousands who had been cut off from their pensions despite having completed their paperwork LE10,000 as an advance through post offices. The 34,000 cases that it said had not completed their paperwork would have to wait without an advance or pensions until their paperwork was finalized. But the organization failed to deliver even on this step to mitigate the backlog, according to MP Mohamed Fouad, who said earlier this week that many are yet to receive the advance payment. “The real issue in this matter,” said Fouad, in an interview with MBC Masr host Sherif Amer, “is that we are talking about the lives of families.” Fouad told television viewers that the NOSI chair had once again promised to resolve the crisis by June 5, warning that Parliament’s Labor Committee may resort to additional oversight measures to hold officials accountable for the continued disruption that is directly affecting families who rely on pensions as their primary source of income. The MP also said that the scale of the issue is much larger than has been acknowledged. Official correspondence submitted to Parliament, he said, shows that around half a million transactions remain backlogged. *** On June 4, a day before the government’s promised deadline for a fix to the issues, Madbuly, responding to journalists’ questions at the weekly Cabinet meeting’s press conference, said that the issues affecting the tens of thousands of pending claimants would be fixed in the next couple of weeks. Discarding the June 5 pledge, he pushed the timeframe for a full resolution even further down the road, stating that the problems facing NOSI’s new digital system would be fully resolved only by August. “Some of the information circulating about the issue does not reflect the full reality of the situation,” he said , describing the transition as a major undertaking that “requires time and effort to ensure data accuracy and the uninterrupted delivery of services.” He added that he had directed Awad to speak publicly about the technical aspects of the project and the challenges encountered during its implementation so that citizens would have a full understanding of the situation and the measures being taken to improve services. Awad came out a few days later only to reiterate the organization’s position that the disruptions were limited to “around 45,000 cases” that he framed as a capacity issue. Speaking on state television on Sunday, Awad attributed the “slowdown” that the organization repeatedly referenced to a performance bottleneck that emerged in mid-April. According to his account, service speeds slowed during peak hours as actual demand exceeded the loads anticipated during testing, requiring additional hardware. He said a technical committee implemented a permanent fix within weeks, and the platform had been operating normally since early May. Addressing the delayed pension payments, Awad said the problem stemmed from a halt in receiving applications while data was being migrated to the new platform between February 24 and March 29. The pause, he said, resulted in the backlog. He apologized to beneficiaries whose pension had been delayed, pledging that “it won’t happen again” but rejected claims that payments had stalled more broadly, once again setting a two-week deadline to resolve outstanding pension files. The Center for Trade Union and Workers Services accused the government in late April of minimizing a crisis that had left beneficiaries unable to access their rights, describing the problem as a “structural failure.” The center also raised questions about the LE1.3 billion it said was spent on a system that was patently unfit to run, as well as the identity of the contractors involved and the people who would be held accountable for the disruption. Similar questions were raised in Parliament, where MPs submitted briefing requests and pushed for investigations into both the system and the state funds spent on it. In late April, MP Freddy al-Baiady, describing the crisis as “a full-blown administrative scandal,” demanded a full account of the project’s cost, implementing companies and operational oversight. He accused the government of reducing a crisis affecting citizens’ livelihoods and insurance rights to a mere “technical malfunction.” Sayed held the government accountable in its planning of the rollout. The government made a mistake by completely shutting down the old system before ensuring that the new one is functioning effectively, he told Mada Masr. The new platform was intended to ease burdens on both citizens and employees, but “the experience of the new system has proven its failure,” he said. As Baiady put it in his appeal for accountability, “people waiting for their pensions are not waiting for a luxury.” Rather than a question of abstract technical malfunction, there are real victims of this system failure, he wrote: “pensioners, beneficiaries, insured workers and every citizen who went to obtain a service or claim a right and left with their hopes dashed.” The post System failure: Tens of thousands cut off from pensions, social insurance services first appeared on Mada Masr .