AUGUST 2024 – SAUDI ARABIA
NEW SOCIAL INSURANCE LAW
It is important that employers note the following:
New Social Insurance Law
The Council of Ministers has passed a new social insurance law that only applies to new hires. In
addition, it has upheld the continuance of the current social insurance and civil pension programmes
for current contributors, with a few limitations about the statutory retirement age and the qualifying
age for retirement for particular groups.
With effect from 3 July 2024, the modified Social Insurance Law creates a new social security
retirement system for those who are just entering the workforce and makes modifications for many
others who are currently employed. It is now simpler for workers to switch between the public and
private sectors thanks to the new system, which applies consistently to both types of employment.
The key changes are as follows:
For new entrants to the labour market with no previous insured employment:
- Normal retirement age (NRA) is 65, based on the Gregorian calendar (previously age 60, based
on the Islamic Hijri calendar, which equates to around age 58 in the Gregorian calendar). - Early retirement is possible after 30 years (Gregorian) of insured employment (previously 25,
Hijri) and attainment of age 55 (Gregorian, previously there was no minimum age
requirement). - Retirement benefits are calculated as 2.25% (previously 2.50%) of the claimant’s average
monthly covered earnings over the claimant’s final two years, multiplied by the number of
years of insured employment. - Employer and employee social security retirement contributions will both increase gradually
from the current 9% (each) of covered earnings to 11% (with annual increases of 0.5
percentage points starting in 2025).
For employees who are below age 50 (Hijri) and have fewer than 20 years of insured employment on
3 July 2024:
- Only NRA and the minimum period of insured employment for early retirement are changed,
with NRA increasing by four months per year and early retirement age increasing by 12 months
per year from 2025.
For employees who are age 50 (Hijri) and above or who have at least 20 years of insured employment:
- No changes — the new law does not apply, and the previous Social Insurance Law remains in
force.
Changes for employees with existing contributions aged under and above 50 years:
- Existing employees will maintain their current contribution rates. For employees under 50, the
retirement age will gradually increase, starting with a 4-month increase, based on their age as
of 3 July 2024. This means that younger employees will see a more significant increase over
time, aligning with the new statutory retirement age range between 58 and 65 years.
Employees over 50 will retain their existing retirement age.
Maternity leave is extended from 10 weeks to 3 months, paid by social security (previously paid by the
employer) for Saudi and non-Saudi employees, provided the claimant has at least 12 months of insured
employment in the 36 months prior to birth.
To view the press release on the General Organisation for Social Insurance (GOSI) website, follow the
link.
