Saudi Arabia Implementation of New Social Security Law
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The General Organization for Social Insurance (GOSI) has recently passed amendments to the Social Security Law, which include a new social security retirement system for new entrants to the workforce and changes for existing employees. The new Social Insurance Law came into law on 3 July 2024 and takes effect 3 July 2025.
Key Details
- Applicability: The new Social Insurance Law is designed specifically for new employees joining the workforces in the public (civil) and private sectors who do not have any prior contribution periods in the current Civil Pension or Social Insurance Laws. This targeted approach ensures that the transition is smooth and that current contributors remain unaffected by the changes.
- Gradual Increase in Retirement Age: The statutory retirement age is now between 58 and 65 Gregorian years based on the contributor’s age on 3 July 2024. The retirement age for those covered by the new system is 65 years old. However, individuals can retire 10 years before the regular retirement age if they have 360 months of subscription, which is equivalent to 30 years of service
- Extended Contribution Periods for Early Retirement: There is a gradual increase in required contribution periods for early retirement. This change, ranging from 25 to 30 years, encourages longer participation in the workforce and ensures that employees are better prepared for retirement.
- Contribution Rates: The employee and employer contribution rates will each gradually increase from 9% to 11% of contributory wages by 0.5% each year from 3 July from 2025 to 2028.
| Employees New To The Workforce | Employees Under Age 50 With Existing Contributions (Not New To Workforce) | Employees Aged 50 And Above (Not New To Workforce): | |
|---|---|---|---|
| Retirement Age | Set at 65 | Increase gradually from the current retirement age 58 until reaching 65. | Continue to follow the rules under the old system with no changes |
| Contribution Rates | Will rise by 0.5% annually starting in the second year, reaching a total increase of 2% by the fifth year. | No change to contribution rates. | No change to contribution rates. |
Employees New to the Workforce (No Prior Social Insurance):
- Applicability: Individuals entering the labor force for the first time after July 3, 2024, with no previous social insurance contributions.
- Retirement Age: Set at 65.
- Contribution Rates: Will rise by 0.5% annually starting in the second year, reaching a total increase of 2% by the fifth year.
Employees Under Age 50 with Existing Contributions Before the Law Effective Date:
- Retirement Age: Increase gradually from the current retirement age, depending on the employee’s age at the time the law is enacted.
- Contributions: These employees will remain in the current system, with no change to contribution rates.
Employees Aged 50 and Above
- Retirement Age: Continue to follow the rules under the old system with no changes.
- Contributions: Contributions will proceed under the existing system without changes to contribution rates.
Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change.
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Saudi Arabia – New Social Security Law – 3 July 2025
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