New social insurance law aims to better serve beneficiaries 
Earlier this month, the Saudi Council of Ministers approved a new social insurance law that aims to improve the efficacy of the social insurance scheme managed by the General Organization of Social Insurance to better meet the long-term financial needs of both existing and future beneficiaries, especially when considering the actuarial risk in comparison to those financial commitments.
The GOSI was established in 1969 to provide social protection and insurance coverage in the Kingdom. Its investment manager is Hassana Investment Company, which invests on behalf of all Saudis for their future pensions. It currently has more than SR1.2 trillion ($300 billion) worth of assets under its management. Hassana’s remit is to create long-term value and deliver the best investment outcomes across several assets categories and geographies.
Hassana’s reported yield on investments is higher than the average of similar pension funds.
The law will make the Kingdom better able to meet the financial needs of existing and future beneficiaries of the scheme.
The new social insurance law is applicable exclusively to new employees and to existing contributors aged below 50 (Hijri) and with less than 20 years of service.
Early retirement requires a contribution period of between 25 to 30 years (Gregorian), with a gradual increase starting with an additional 12 months to the current required period, depending on the contribution period at the date the amendments came into effect on July 3.
It is important to note that the new social insurance law does not apply to those who retired before it came into effect.
The GOSI stated that the statutory retirement age for individuals affected by the amendments will range between 58 and 65 (Gregorian) and will involve a gradual increase, starting with an addition of four months to the current statutory retirement age, based on the contributor’s age at the date the amendments came into effect.
I believe that the new social insurance law will enhance the Kingdom’s social insurance scheme and make it better able to meet the financial needs of existing and future beneficiaries of the scheme, especially considering the increasing number of beneficiaries year-on-year.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz.
