A. BACKGROUND

Mongolia received credit from the International Development Association (IDA) for the Strengthening Fiscal and Financial Stability Project (SFFSP). The Objective of the SFFS Project is to improve fiscal policy and sustainability in a mineral-based economy, protect the poor and vulnerable, and restore confidence in the financial sector. The project is designed into five components: (I) Strengthening Macroeconomic and Fiscal Management; (II) Improving the Efficiency of Public Financial Management; (III) Enhancing Financial Sector Stability; (IV) Strengthening the Social Protection System; (V) Project Management and Monitoring. The objectives are to Strengthening fiscal responsibility and implementing relevant policy measures, improving fiscal discipline, strengthening the resiliency of the banking system, improving public expenditure quality in social protection, providing support for Project implementation, coordination, monitoring, and evaluation, including, inter alia, audit arrangements, reporting requirements, procurement, and financial management activities respectively. For more details, please refer to the Project Appraisal Document Report No. PAD2269. The objective of sub-component D2 is to support the Government’s efforts to improve public expenditure quality in social protection through (a) strengthening social insurance by supporting the implementation of measures set forth in the State Policy on Pension Reforms (2015–2030) and other reforms to strengthen social insurance programs, and (b) strengthening the governance and FM aspects of social insurance program

In the area of social insurance in Mongolia, the Pension Insurance Scheme poses a sharply growing fiscal burden as a result of the rapidly aging population and several measures introduced, in recent years, to the scheme, which increased benefits and/or reduced eligibility requirements. In this context, the State Policy on Pension Reform (2015–2030) was approved by the Parliament in December 2015 to “create a framework for the government, employers, and individuals to be jointly responsible for addressing the ever-increasing pension costs due to the changes in demographic structure and life expectancy and provide a decent pension benefit that is adequate for living for elders.” The state policy envisioned addressing the fiscal burden through parametric reforms, which better align contributions and benefits and limit the state subsidy to the social insurance fund to no greater than 2 percent of GDP in the long term. The policy, however, is not legally binding and therefore needs to be followed up with amendments to the Social Insurance Law to achieve the policy objectives envisioned. In-country technical capacity for evidence-based pension policymaking and implementation is limited.

The state subsidy to pensions amounted to about 2.2% of GDP in 2018 (about 8% of government revenues and grants) and is projected to increase to over 6% of GDP by 2030 (about 22% of revenues and grants if held constant) and 11% of GDP by 2050 . The increase is primarily attributed to the rapid aging of the population (the proportion of the population over age 60 is projected to triple from 6.2% in 2015 to 18.8% in 2050) and government policies which have liberalized pension benefits and loosened qualifying conditions.

The Ministry of Labor and Social Protection (MLSP) is working towards implementing the State Policy on Pension Reforms (2015-2030).  The process for revising relevant legislations in line with policy priorities, including parametric reforms to the pension system is ongoing.  Pension reform and the formulation of programs to improve social insurance coverage among informal workers, herders, and the self-employed, the non-pension elements of the Social Insurance Scheme, and needs to adjust technical parameters such as financial sustainability, contributory incentives, and adequacy of benefits. The working groups tasked to prepare draft amendments to the package of social insurance laws were formed by the Minister of Labor and Social Protection in 2016 (order No. A/244 dated 17 November 2016), and the working groups were renewed in 2018 (Order No. A/73, dated 20 March 2018) and in late 2020 ( Order No.A/197 of the Minister of Labor and Social Protection dated October 7, 2020).

The Government of Mongolia was re-established in 2020 following the Parliamentarian election of June 2020.  The Parliament and the Government of Mongolia have renewed the long-term and mid-term policy documents to ensure the sustainability and continuity of Mongolia's development policy and planning, including “Vision-2050”, “Five-Year Guidelines for Development of Mongolia in 2021-2025”, and “Action Plan of the Government of Mongolia for 2020-2024”.  The policy documents, including the “Government Action Plan” have stipulated the following social insurance reforms agenda: expanding the coverage of social insurance, developing the pension insurance as a multi-tiered system, establishing proper management of social insurance fund assets, bringing the fund to a loss-free level, reform the social insurance system, providing basic pension to every old-age citizen, introducing a private pension scheme, gradually increasing pension benefits in line with inflation, and creating conditions for the family to inherit a certain part of the balance of the personal account of social insurance premiums.

With this background, the MLSP hired local consultants between 2017 to 2020 to get technical support in the process of developing the concept notes of legal revisions and preparing revised social insurance package laws.  The local consultants and the working group members worked on concept papers for revising to the Package Social Insurance Laws (The general Law on Social Insurance, Law on Pensions and Allowances Provided from Social Insurance Fund,  Law on Unemployment Benefit Provided from Social Insurance Fund, Law on Pensions and Benefits Provided from Industrial Accidents and Occupational Disease Insurance Fund) and preparing the initial drafts of respective laws. The concept notes for revising the laws were first approved by the Ministry of Justice and Home Affairs on August 10, 2018, and consequently, the first draft amendments were prepared. 

MLSP also hired international consulting services which specifically focused on modeling the effects of several proposed changes to pension parameters and qualifying conditions. Based on actuarial projections and policy directions emerging, the MLSP  reformulated in 2020, the draft revisions to Social Insurance Package Laws and developed a set of amendments to be made to other laws (about 30) in line with revising social insurance laws. MLSP also hired international and national consulting services to outline key reform needs and options in respect of the reserve and liquidity management of the Social Insurance Fund (SIF), and to outline key reform needs and options to strengthen social insurance contributions collections. These consulting services are ongoing, and reports had been available since April 2021.  

Following the formation of the new Government, the Concept Notes on the revision of four social insurance laws were revised and approved jointly by the Minister of Justice and Home Affairs and the Minister of Labor and Social Protection on December 3, 2020. In connection with the revision of the concept notes and new government’s priorities, it became necessary to bring required changes to the respective draft revised  Social Insurance Laws.  The MLSP is working to submit the revised social insurance laws to the Cabinet meeting in May of 2021 and then to the Parliament in the fall session of 2021, at latest.

In this regard, the MLSP needs further support in i) preparing the final drafts of revised laws for submission to the Cabinet meeting and the Parliament based on revised Concept Notes, the Government’s renewed priorities on certain aspects of pension reforms, and the recommendations proposed by ongoing and recent assessments, including assessments on reserve and liquidity management, policies and operational processes for contribution collection, monitoring and enforcement, private supplementary pension, and additional actuarial projections; iii) supporting the MLSP in having stakeholder consultations on the revised draft laws before submission to the Parliament, iii)  effectively communicating about the social insurance reforms to the public; and iv) developing or revising respective regulations and procedures to be followed the proposed revised laws. 

Therefore, the MLSP requests to hire two national consultants to assist the Ministry and its Working Groups in implementing the above-mentioned activities. This TOR outlines the scope of work and deliverables for a National Consultant 2 (NC2).  The NC2 will primarily focus on a series of assignments related to the revision of the following two laws: i) General Law on Social Insurance, and ii) Law on Benefits Provided from Social Insurance Fund.  

The NC2 shall work closely with the National Consultant 1 (the scope of work is to be provided by a separate TOR) and ensure that the further enhancements to be made to the draft revised laws reflect the policy priorities, including the State Policy on Pension Reform (2015-2030),  latest analytical studies (including on the outline key reform needs and options in respect of the reserve and liquidity management of the Social Insurance Fund (SIF), and the outline key reform needs and options to strengthen social insurance contributions collections)  and stakeholder consultations planned to take place prior to submitting the draft revised laws to the Cabinet and the Parliament. 

B. OBJECTIVE OF THE ASSIGNMENT

The main objective of this consultant service is to facilitate the MLSP Working Groups in finalizing the draft revision of respective social insurance laws before submission to the Parliament and supporting the Ministry in carrying out public awareness and training activities that focus on social insurance reforms and revision of respective social insurance laws.  

C. SCOPE OF THE WORK

The local consultant will be responsible for the following tasks of this assignment. These include i) further enhancing the draft revised General Law on Social Insurance, ii) further enhancing the draft revised Law on Benefits Provided from Social Insurance Fund, iii) revising as necessary, the study on socio-economic impacts from revising respective laws; iv) supporting the MLSP in carrying out a series of stakeholder consultations on the revision of respective laws; v) drafting regulations and procedures expected to be adopted following the adoption of the above two laws, vi) preparing a number of elaborated contents on a revision of the respective two laws which are designed to be used for public awareness activities, and v) preparing contents for online training of social insurance officers.

The consultant will undertake the following tasks:

Task I. Review and finalize further introduce required modifications to the draft revision of General Law on Social Insurance taking into consideration the key policy and reform agenda of the government and in view of the comments and recommendations provided by development partners, including the World Bank;

Task II. Review and finalize the draft revision of Law on Benefits from the Social Insurance Fund, taking into consideration the key policy and reform agenda of the government and in view of the comments and recommendations provided by development partners, including the World Bank;

Task III. Develop amendments to the resolutions, rules, procedures as indicated by the MLSP to be approved by the Government and National Social Insurance Board (NSIB) and the Government in connection with the implementation of the revised draft General Law on Social Insurance, and the revised draft Law on Benefits Provided from The Social Insurance Fund; 

Task IV. Develop background materials for public communication products on  the draft revision of General Law on Social Insurance and the draft revision of Law on Benefits from the Social Insurance Fund, including  accuracy review of the drafts of various products; 

Task V.  Prepare supportive materials for presenting the revision of the Law on Social Insurance General and Law on Benefits Provided from Social Insurance Fund to the Parliament for discussion, including the comparison of the provisions of the old social insurance law;

Task VI. Support the development of an online training program for social insurance workers and social insurance inspectors , including drafting of training contents as per themes indicated by the MLSP;

Task VII. Support the MLSP in synthesizing the comments and recommendations provided by the stakeholder and public consultations (online and offline) on the revision of the Law on Social Insurance General and Law on Benefits Provided from Social Insurance Fund and proposed amendments to other related laws and reflecting them as appropriate, into draft legislation.

Other tasks as reasonably requested by the MLSP and technical working group. 

D. DELIVERABLES

All deliverables should be discussed with relevant officials of MLSP and SIGO with the incorporation of comments in order to ensure the quality of the deliverables:

Deliverable 1. Referring to the Task I:

1.1. Finalized draft of the revised General Law on Social Insurance as readied for submission to the Parliament;

1.2. Finalized draft amendments to other relevant laws to be submitted together with the draft revised Law on Social Insurance General;

1.3. Assessment of the socio-economic impact of the revised General Law on Social Insurance and related amendments to other laws;

1.4. Finalized estimation of expenses related to the implementation of the draft Law on Social Insurance General;

1.5. Draft Resolution of the Parliament on “Some measures to implement the law”.

Deliverable 2. Referring to the Task II:

2.1. Finalized drafts of the revised Law on Benefits Provided from the Social Insurance Fund;

2.2. Finalized draft amendments to other relevant laws to be submitted together with the draft revised Law on Benefits Provided from the Social Insurance Fund;

2.3. Assessment of the socio-economic impact of the revised Law on Benefits Provided from the Social Insurance Fund and related amendments to other laws;

2.4. Finalized estimation of expenses related to the implementation of the draft Law on Benefits Provided from the Social Insurance Fund.

Deliverable 3. Referring to the Task III:

3.1. Developed draft procedures for registering and assigning an employer number, opening, maintaining, and transferring personal files;

3.2. Developed draft rules governing the duties of the member of the Special Committee in charge of fund management under the National Social Insurance Council, the model and terms of the contract to be concluded with him, and the amount of salary;

3.3. Amended draft rules of procedure of the Central Dispute Resolution Council and Health Probability Council;

3.4. Amended draft rules of the social insurance organization and inspector, amount of incentive benefit to be provided to inspectors, the procedure for payment;

3.5. Amended draft procedure for determining, suspending, and accrediting to state social insurance inspectors;

3.6. Amended draft guidelines for the insured to receive pensions, benefits, payments, and expenses.

Deliverable 4. Referring to the Task IV:

4.1. Background materials to be used for developing public communication products that fully captures the context, objective, nature, scope, and specifics of social insurance reforms (related with Finalized drafts of the revised General Law on Social Insurance and Finalized drafts of the revised Law on Benefits Provided from the Social Insurance Fund) and other related reform issues.

Deliverable 5. Referring to the Task V:

5.1. Developed comparison for the old General Law on Social Insurance and the Law on Pensions and Benefits from the Social Insurance Fund with the provisions of the new law, add explanatory columns, by format as indicated by the MLSP.

Deliverable 6. Referring to the Task VI:

6.1. Training content developed for five training programs for social insurance workers and social insurance inspectors (on subjects to be indicated by the MLSP). 

Deliverable 7. Referring to the Task VII:

7.1. Final Report including the matrix of main comments and recommendations drawn from consultations with key stakeholders carried out before submitting the revised laws to the Parliament and the notes on how they were addressed in the draft legislation. 

E. CONSULTANT’S QUALIFICATIONS/ SELECTION CRITERIA 

Education: A suitable candidate should have  a bachelor's degree in economics or accounting and a master's degree in Economics;

Professional qualifications: A suitable candidate should have extensive experience with social insurance policies and strategies, and experience in preparing and developing social protection policies and legislation would be a plus; 

Experience: A candidate should have at least 25 years of directly relevant professional experience in the field of social insurance policies; 

Language literacy: A candidate should have excellent Mongolian writing and understanding of English;

Other: Excellent communication and interpersonal skills with the ability to function effectively and collaboratively in a team environment, high proficiency in processing the documents, being punctual, and ability to bear the workload.

F. SUPERVISION AND REPORTING

The consultant will report directly to the Head of a Technical Working Group, who is the Director of Policy, Planning Department (PPD).  The consultant will work on a day-to-day basis under the guidance of the Lead consultant and Director of PPD on technical matters related to the assignment. Work progress will be presented during the working group meeting or other meetings as needed.  The Director of PPD shall evaluate the performance on the agreed deliverables and approve the invoices for the delivered outputs.   

The consultant will prepare a 3-5 pages summary progress report detailing the achievements and impediments in executing the entire assignment effectively.  The MLSP and SFFS PIU will provide input to the evaluation of the consultant’s performance. 

G. CONTRACT DURATION

The consulting service is expected to commence in late June 2021.  The contract will have a duration of 8 months.

Based on the evolving needs of the Client and the performance of the consultant, the contract may be extended if needed. If any task is not finished and approved by the Client within the agreed-upon timeline, the consultant should complete the task/s without any additional cost.

H. PAYMENT CONDITION

Payments will be released upon satisfactory completion of all deliverables due for each task, according to the following schedule:

• Submission of Deliverable 1 stated in the ToR conditional on the Client’s approval: 10 % of the total contract amount; 
  
• Submission of Deliverable 2 stated in the ToR conditional on the Client’s approval: 10 % of the total contract amount; 
• Submission of Deliverable 3 stated in the ToR conditional on the Client’s approval: 20 % of the total contract amount; 
• Submission of Deliverable 4 stated in the ToR conditional on the Client’s approval: 20 % of the total contract amount; 
• Submission of Deliverable 5 stated in the ToR conditional on the Client’s approval: 10 % of the total contract amount; 
• Submission of Deliverable 6 stated in the ToR conditional on the Client’s approval: 20 % of the total contract amount; 
• Submission of Deliverable 7 stated in the ToR conditional on the Client’s approval: 10 % of the total contract amount. 

G. INSTITUTIONAL ARRANGEMENTS

The MLSP will provide office space for the consultant to work with the lead consultant and technical working group as well as the MLSP officials.  The consultant will have access to all necessary data and information.

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