Saudi Arabia is planning to implement a voluntary pension and savings scheme, which will be open to both Saudis and foreign workers.
This was revealed in a comprehensive report prepared by the International Monetary Fund (IMF) after a recent visit to the Kingdom under Article IV of the IMF’s Articles of Agreement. A staff team of IMF visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies.
The new voluntary pension scheme aims at increasing household savings and potentially reduce remittance outflows – a move welcomed by the IMF team.
However, it said that given the General Organisation for Social Insurance’s (GOSI) significant assets – nearly 32 per cent of the GDP – improving transparency through enhanced financial disclosure and allocation rules will be crucial.
GOSI is the Saudi governmental entity that manages social security and insurance programs.
In the report, the IMF said: “The newly implemented pension reform should strengthen long-term fiscal sustainability. Adopted in July 2024, it raises the retirement age, required contribution periods, and contribution rates while tightening pension benefits.
“Though immediate fiscal savings are unlikely as the system is currently balanced, its medium-term impact should be fully accounted for and communicated.”
As per Saudi Gazette, foreign remittances from Saudi Arabia rose 14 per cent last year to SR144.2 billion (US$38.4 billion). Over the past decade (2015–2024), the outflow has crossed SR1.43 trillion (US$381.3 billion). As of the first quarter of 2025, Saudi Arabia had 12.8 million subscribers in the social insurance system, 77 per cent of whom – nearly 10 million – were expatriates.
The new Social Insurance Law came into effect on 3 July 2024. The amendments support retirement benefits for an aging population by increasing the statutory retirement age, revising the old-age pension formula, raising contribution rates, and extending the contribution period required for early retirement.
Under the new law, GOSI said there would be a gradual increase in pension contributions, starting from the second year of the law’s implementation until the fifth year. The increase will be 0.5 per cent annually, reaching a cumulative increase of 2 per cent. The total contribution rate will thus rise to 11 per cent (shared between the employee and employer), up from the current 9 per cent.
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