Voluntary Pension and Savings Scheme for Foreign Workers in Saudi Arabia
Saudi Arabia is set to introduce a new voluntary pension and savings program aimed at both Saudi and foreign workers, as highlighted in the International Monetary Fund (IMF)’s latest Article IV consultation report.
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Objectives of the Program
- Boost Household Savings: The initiative aims to enhance savings among workers.
- Curb Outflow of Remittances: It is expected to help reduce the amount of money sent abroad by expatriates.
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Key Statistics
- Foreign Remittances: In 2023, remittances from Saudi Arabia increased by 14% to SR144.2 billion (approximately $38.4 billion). Over the last decade (2015-2024), total remittances reached SR1.43 trillion.
- Social Insurance Subscribers: As of Q1 2025, there are 12.8 million subscribers in the social insurance system, with 77% (nearly 10 million) being expatriates.
Recent Pension Reforms
The IMF report noted several pension reforms implemented in July 2024 aimed at ensuring long-term financial sustainability, including:
- Raising the retirement age.
- Extending contribution periods.
- Increasing contribution rates.
- Restricting pension benefits.
While these changes are not expected to yield immediate fiscal savings, they are designed to strengthen the system over the medium term.
Anticipated Impact
The upcoming voluntary pension and savings program is viewed as a positive development that could significantly:
- Enhance household savings.
- Reduce the volume of external remittances.
Additionally, the IMF emphasized the importance of improving transparency in the General Organization for Social Insurance (GOSI), which holds assets amounting to 32% of Saudi Arabia’s GDP, through stronger financial disclosures and clearer allocation rules.
This initiative aligns with Saudi Arabia’s broader economic strategies and commitment to enhancing the financial wellbeing of both local and expatriate workers.
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- Voluntary Pension and Savings Scheme for Foreign Workers in Saudi Arabia
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