General Organization for Social Insurance (GOSI)

At a glance

• What it is: the Saudi government body that administers mandatory social insurance for workers in the Kingdom
• Arabic: المؤسسة العامة للتأمينات الاجتماعية
• Covers: retirement pensions, occupational injury, disability, death benefits and unemployment support
• Applies to: all private-sector employees in Saudi Arabia, with coverage scope differing by nationality
• Governing law: Social Insurance Law, with a new framework issued under Royal Decree M/273 in force since 3 July 2024
• Contribution base: basic salary plus housing allowance, capped at SAR 45,000 per month
• Employer duty: register, declare wages, and remit contributions monthly

What GOSI is

The General Organization for Social Insurance is the statutory authority responsible for social insurance in Saudi Arabia. It collects contributions from employers and employees, administers the funds, and pays out benefits – pensions on retirement, compensation for work-related injury and disability, benefits to dependants on death, and unemployment support for eligible Saudi nationals.

For an employer, GOSI is the counterparty for one of the two largest recurring statutory obligations in a Saudi payroll – the other being end-of-service gratuity. It is also the system of record for the workforce: GOSI registration data feeds Saudization measurement and interacts with the labour platforms employers use for contracts and wage protection.

It is a large system. GOSI serves roughly 12.9 million contributors, with expatriates making up around 77% of subscribers and Saudi nationals about 23%.

The three insurance branches

GOSI does not operate as a single pooled deduction. It runs distinct branches, each with its own scope, funding split and eligible population. Getting the branch logic right is what makes a Saudi payroll correct.

Annuities (pensions). The retirement and long-service branch, covering Saudi nationals and GCC nationals. Funded jointly by employer and employee. This is the largest component of the contribution and the one affected by the 2024 reform.

Occupational hazards. Covers work-related injury, occupational disease, resulting disability, and death. This branch applies to every employee in the Kingdom regardless of nationality, and it is funded entirely by the employer. It is the reason a non-Saudi payroll still carries a GOSI cost.

Unemployment insurance (SANED). Provides income support to Saudi nationals who lose employment through no fault of their own. Funded by employer and employee in equal shares.

Two contribution systems running in parallel

This is the single most important operational point about GOSI in 2026, and the one most likely to produce errors.

The new Social Insurance Law came into force on 3 July 2024 and applies to Saudi nationals who entered the workforce on or after that date with no prior GOSI contribution history. Everyone already in the system stayed on the previous framework. The result is two rate tables operating simultaneously, distinguished not by nationality or hire date alone but by first GOSI registration date.

Existing system – Saudi nationals already registered before 3 July 2024. The combined rate remains 21.5%: employer 11.75% (9% pension, 2% occupational hazards, 0.75% SANED) and employee 9.75% (9% pension, 0.75% SANED). These rates are stable and not part of the phased increase.

New system – Saudi nationals first registered on or after 3 July 2024. The pension component steps up by 0.5% on each side every July through 2028. The combined rate was 22.5% until July 2026 and rose to 23.5% from 1 July 2026, split 12.75% employer and 10.75% employee, reflecting a 10% pension contribution on each side. The scheduled path takes the pension component to 11% each side by July 2028.

Non-Saudi employees – occupational hazards only, at 2%, paid entirely by the employer. No pension and no SANED. This has not changed under the reform.

The practical warning: nationality is not the rate trigger. A Saudi employee hired in 2026 who has prior contribution history sits on the existing system, while a first-time entrant hired the same week sits on the new one. Payroll must classify each Saudi employee individually against their GOSI record rather than inferring from a hire date.

The contributory wage

Contributions are not calculated on total compensation. The contributory wage is defined by the law and generally comprises basic salary plus housing allowance, whether paid in cash or provided in kind, along with certain regular fixed allowances.

Excluded items typically include transport allowance, irregular bonuses, end-of-service gratuity and payment for accrued leave.

Two limits apply. There is a minimum contributory wage for Saudi nationals, so contributions are calculated on the floor even where actual pay is lower. And there is a maximum contributory wage of SAR 45,000 per month – earnings above that ceiling attract no contribution, which caps employer cost on senior salaries and, correspondingly, caps the employee’s eventual pension entitlement.

Employer obligations

The obligation set is administrative rather than complex, but it is unforgiving on timing.

• Register the establishment with GOSI when it begins operating.
• Register each employee – Saudi and non-Saudi – on commencement of employment, within the statutory window.
• Declare wages monthly and keep declared amounts consistent with actual payroll.
• Remit contributions monthly by the due date.
• Report changes promptly: joiners, leavers, wage changes, and changes in employment status.
• Report work injuries to GOSI so the occupational hazards branch can process the claim.
• Keep GOSI data aligned with the wider compliance stack – Saudization classification, contract registration and wage protection filing all draw on the same workforce data.

GOSI applies financial penalties for late registration, late payment and under-declared wages, and inconsistencies between declared wages and actual payroll are a common trigger for inspection. Because GOSI records also feed Saudization measurement, registration errors can have consequences well beyond the contribution itself – affecting an establishment’s classification and therefore its ability to obtain visas and process government transactions.

Where employers get it wrong

• Classifying Saudi employees by hire date instead of first GOSI registration date, and applying the wrong rate table.
• Missing the July rate step for new-system employees, or applying it to existing-system employees who are not affected.
• Calculating on gross pay rather than the defined contributory wage, or including excluded allowances.
• Failing to apply the SAR 45,000 ceiling, which inflates contributions on senior staff.
• Omitting the 2% occupational hazards contribution for expatriate employees on the assumption GOSI is a Saudi-nationals-only cost.
• Declaring a wage to GOSI that does not match what payroll actually paid.
• Late registration of joiners, which is straightforward to avoid and routinely penalised.

How Mercans manages GOSI compliance

Mercans delivers managed payroll and Employer of Record services in Saudi Arabia through its own in-country capability, with GOSI administered as a statutory service rather than left as a client-side configuration exercise.

• Employee-level system classification. Each Saudi employee is assigned to the existing or new contribution system based on GOSI registration history, so the correct rate table is applied per person rather than per hire date.
• Rate changes applied on schedule. The annual July uplift under the new law is built into the platform and applied to the correct population in the correct period, without depending on an in-house reminder.
• Correct contributory wage construction. Contributions are calculated on the defined base – basic plus housing and qualifying fixed allowances – with the minimum and SAR 45,000 ceiling enforced automatically.
• Registration and lifecycle events. Establishment and employee registrations, joiners, leavers, wage changes and injury reporting are handled within statutory timeframes.
• Monthly declaration and remittance. Wage declarations are reconciled against the payroll register before submission, so declared and paid amounts agree.
• Integrated Saudi compliance. GOSI sits alongside wage protection filing, contract registration and Saudization tracking in one operating model, rather than as separate workstreams with separate data.
• Market entry without an entity. Organisations hiring in the Kingdom before establishing a legal presence can access GOSI registration, payroll and compliance through Mercans’ Employer of Record, then transition to a managed payroll model once an entity is in place.

Frequently asked questions

What does GOSI stand for and what does it do?

GOSI is the General Organization for Social Insurance, the Saudi government authority that administers mandatory social insurance across the Kingdom. It collects contributions from employers and employees and pays benefits covering retirement, occupational injury, disability, death and unemployment. It also serves as the official register of the insured workforce, which links it to Saudization measurement and other labour compliance systems.

Do employers pay GOSI for expatriate employees?

Yes, but only for one branch. Non-Saudi employees are covered by occupational hazards insurance at 2% of the contributory wage, paid entirely by the employer with no employee deduction. They are not covered by the pension branch or by SANED unemployment insurance. Treating GOSI as an obligation that applies only to Saudi nationals is a common and costly error, particularly in workforces that are predominantly expatriate.

Why are there two different GOSI contribution rates for Saudi employees?

Because the new Social Insurance Law, in force since 3 July 2024, applies only to Saudi nationals who entered the workforce on or after that date without prior contribution history. Those already in the system remain on the previous rates, which are unchanged. The new-system rates increase annually each July through 2028, so the two populations diverge further over time. Classification must be based on each employee’s first GOSI registration date, not on nationality or when they joined your organisation.

What salary components are GOSI contributions calculated on?

The contributory wage, not total pay. It is generally basic salary plus housing allowance – whether paid in cash or provided in kind – together with certain regular fixed allowances. Transport allowance, irregular bonuses, end-of-service gratuity and leave encashment are typically outside the base. A monthly ceiling of SAR 45,000 applies, so no contribution is due on the portion of the contributory wage above that figure, and a minimum applies for Saudi nationals.

What happens if an employer registers late or under-declares wages?

GOSI imposes financial penalties for late registration, late payment and under-declaration, and it can recover unpaid contributions. Discrepancies between declared wages and actual payroll are one of the most common inspection triggers, since the two data sets are easy to compare. The knock-on risk is often larger than the fine: because GOSI records feed Saudization classification, registration failures can affect an establishment’s standing and its access to visas and government services.

Is GOSI the same as end-of-service gratuity?

No. They are separate obligations with different mechanics. GOSI is a monthly contribution paid to a government body that administers pooled insurance benefits. End-of-service gratuity is an accrued entitlement the employer owes the employee directly on termination, calculated on length of service. Both need to be provisioned, but only one is remitted monthly, and a GOSI contribution does not reduce a gratuity liability.