Civil Pension Law in Saudi Arabia

The Civil Pension Law in the Kingdom of Saudi Arabia is a set of legal rules governing the pension of Saudi civil servants in the Kingdom appointed to grades in the general state budget or the budgets of general authorities. Its provisions do not apply to a person occupying the position of minister, who is granted a monthly allocation for occupying such position, except if he chooses to assign the monthly allocation in return for enjoying the benefits of this law. The Civil Pension Law was issued in 1973 during the reign of King Faisal Bin Abdulaziz Al Saud. Since its issuance, several articles in the law have been added and amended over the years, notably in the years 1976, 1983,2021, and 2022. Following a decision by the Council of Ministers on June 15, 2021, the General Organization for Social Insurance (GOSI) has taken over the implementation of the law. This decision involved merging the Public Pension Agency into GOSI effectively replacing the former with the latter.

The Civil Pension Law stipulates a deduction of 9 percent from the salary of employees benefiting from this law on a monthly basis. The Ministry of Finance or the general authority also contributes a similar share to what the employee pays. The government's or the general authority's share may be increased by a decision of the Council of Ministers if it is found that this share is insufficient to meet its obligations. The Minister of Finance issues the necessary procedures for the deduction and the corresponding share. The deductions and shares are calculated based on the full basic salary without additional benefits.

Civil employees are retired at the age of sixty years, but their service may be extended until the age of sixty-five by a decision of the Council of Ministers. Ministers and judges are exempt from this rule. In exceptional cases, service may be extended beyond the age of sixty-five by Royal Decree.

The calculation of the pension includes the periods served by Saudi employees hired in the general budget of the state or the budgets of general authorities, or those subject to pension laws. This calculation excludes periods of unauthorized absence, leaves granted without pay, except for sick leave and study leave, as well as periods of suspension where the employee is deprived of their salary, and any fractional months during the service period.

The periods of secondment and study leave without pay are included in the credited service for pension. Deductions due for these periods are based on the full salary of the original position or the position the seconded employee is performing monthly. The seconded employee is not credited for the period during which they failed to pay the deductions due for them. As for the employee on study leave, deductions are made upon their return to service in a position subject to the law, either in a lump sum or in monthly installments for a period not exceeding the study leave duration. If the employee's service ends before completing the payments, the remaining installments are settled either as a lump sum from the gratuity or from the pension they are entitled to or for the beneficiaries through monthly installments equivalent to 35 percent of the pension or the total pensions of the beneficiaries. If the employee does not return to service in a position subject to the law due to reasons attributable to them, the study leave period is not counted towards their retirement.

The law stipulates that an employee is eligible for pension upon reaching at least twenty-five years of service, or his civil and military service has reached twenty-five years at least. An employee may request referral to retirement and receive a pension after the expiration of a service period of not less than twenty years, as calculated in the pension laws, provided that such referral is approved by the competent entity entitled to appoint his likes. However, if the termination of service is due to cancellation of the job or dismissal by a decision of the Council of Ministers or by a High Order, unless the dismissal is based on disciplinary reasons, the employee is entitled to a pension whenever the period of his contributory service reaches at least fifteen years. An employee whose service is terminated due to his death, disability, or reaching the age of retirement, is entitled to a pension. If the entire length of both the civil and military service does not reach the period for which an employee is entitled to a pension in accordance with the Civil Pension Law, the lump sum settlement for his military service is settled pursuant to the Military Pension Law in force upon the expiry of his latter service, and the sum of the two lump sum settlements is disbursed.

If an employee's service expires and they have not reached the required duration for pension eligibility, they receive a bonus equivalent to 14 percent of their annual salary for each year of service. If the termination of service is due to resignation or dismissal for disciplinary reasons, the bonus is calculated at a rate of 10 percent of the annual salary for each year of service considered for pension. The annual salary refers to the last monthly salary the employee earned multiplied by twelve.

The pension of the deceased employee or discharged from service due to incapacitation is calculated based on 40 percent of their last monthly salary or the pension entitlement for their service payable in pension, whichever is greater. If death or disability occurs due to or during the performance of duty, it is settled on the basis of four-fifths of the last monthly salary. Workplace injuries include those occurring during an employee’s journey to or from his workplace or working area and for the purpose of performing his duties. If it is proven by a final court judgment that a person is missing, they are treated similarly to someone whose death has been established from the date of disappearance as stated in the court ruling. The pension payments are not suspended before the issuance of a final court judgment. Any remaining amounts from the pension are due to the pensioner from the date of their disappearance until the date their death is proven either in reality or by a court judgment. If it is discovered that the missing pensioner is alive, their pension rights are retroactively settled.

The pension settlement for a minister, who serves as a member of the Council of Ministers, can be approached in two ways. Firstly, a pension equal to 25 percent of his salary in the position of a minister is fixed for the minister, regardless of the duration or frequency of their tenure. Additionally, a pension is added to such pension for any service period served in a position other than that of a minister, to be calculated at one-fortieth of the average monthly salary in the last two years of such period. Secondly, his pension is settled for the total of his services, including his service in the position of a minister. In no case may the pension of a minister exceed four-fifths of his salary in the position of a minister.

The spouse, mother, father, son, daughter, son and daughter of a son who died during the pensioner’s life, brother, sister, grandfather, and grandmother are entitled to the pensioner. Except for the wife, son, and daughter, it is required for an individual to be dependent on the pensioner at the time of their death to be entitled to the pension. The pension entitled to male sons, grandsons, and brothers is terminated when they reach the age of twenty-one, except for those who are students in a recognized secondary or higher education institution or a recognized equivalent, and those who are completely medically incapacitated and unable to work. The pension of the wife, daughter, granddaughter, and sister is discontinued upon their marriage. A retiree is entitled to a pension as of the day following the expiry of his service, and his beneficiaries are entitled to the same from the day following his death.