By Sam Bridge
Saudi Arabia has been urged to increase the state pension age to better reflect increasing life expectancy
Saudi Arabia has been urged to increase the state pension age to better reflect increasing life expectancy as its pension system was given a C mark in a global comparison list.
The retirement age for men is currently 60, with women able to retire at 55 but there are plans to gradually increase this to 65 and 63 by 2028.
According to Mercer's 2019 Melbourne Mercer Global Pension Index survey (MMGPI) that compares pension plans across the world, Saudi Arabia had an overall index value of 57.1 among the countries analysed, scoring better than countries like Japan and Italy.
The report said the C mark represented a system that has "some good features, but also has major risks and/or shortcomings that should be addressed".
This year’s index edition compares a total of 37 retirement systems across the globe and covering almost two-thirds of the world’s population.
The index highlighted key strengths of retirement pension systems around three sub-indexes - adequacy, sustainably and integrity, where Saudi Arabia scored 59.6, 50.5 and 62.2, respectively.
It said Saudi Arabia demonstrated positive results in adequacy due to the kingdom’s generous retirement benefits with high minimum pensions relative to earnings, as well as the high net household saving rate.
Positive scores around sustainability were also noted due to a sound structure with a funded pension system and a compulsory participation from employees and employers with mandatory contributions set aside for retirement benefits.
The report also acknowledged Saudi Arabia’s efforts in integrity with regards to the regulated pension systems which are continuously being monitored by the government and audited by external auditors.
Tarek Zouiten, Mercer's retirement business leader for the Middle East, said: “The government is working towards implementing new strategies that will allow Saudi Arabia to improve its current pension system, including better administration processes, more digitalisation, stronger governance and better coordination between government agencies.
"The Saudi Government is also committed to working with the private sector in order to provide customised benefits and services for pensioners and beneficiaries as an add-on for the existing services in all regions of the kingdom."
The report also underlined areas of improvement for the Saudi pension system including improving the minimum level of support for the lowest earning group under adequacy while in terms of sustainability, it was recommended to increase the state pension age to better reflect increasing life expectancy.
Globally, the Netherlands had the highest index value (81) while Thailand had the lowest index value (39.4).
For each sub-index, the highest scores were Ireland for adequacy (81.5), Denmark for sustainability (82) and Finland for integrity (92.3). The lowest scores were Thailand for adequacy (35.8), Italy for sustainability (19) and Philippines for integrity (34.7).finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.