Social insurance in Saudi Arabia aims to provide financial support and social welfare to citizens and residents. Such a system aims to avert social risks, including unemployment, disability, and old age. Both the employee and the employer need to know much about the social insurance system as they keep on working in the labor sector.
The establishment liaising with social insurance matters is GOSI, the General Organization for Social Insurance. The establishment of the organization came in 1969; since then, it has been implementing social insurance schemes for workers in the private sector and some public sector employees. The organization provides support to workers when they face difficult times, promoting the relevance of social welfare in the country.
The system was issued by a Cabinet Decision on 3 Ramadan 1421 AH/November 29 of the Year 2000. Approval was issued to implement the amendments to the Civil Retirement System and the Social Insurance System on 26 Dhu al-Hijjah 1445 AH/July 2 of the Year 2024. The General Organization for Social Insurance is responsible for implementing the system.
Branches of the Social Insurance System
The Social Insurance System includes two branches: Branch (A) Occupational Hazards: This branch concerns employees in the private sector or government agencies covered by Labor Law. This branch provides compensation stipulated in the law and implements regulations for injuries resulting from work-related injuries.
Branch (B) Pensions: This branch concerns Saudi employees in the private sector or government agencies covered by the Labor Law, in addition to Saudi self-employed professionals. In this case, they are entitled to benefits provided that the legal requirements are met upon leaving work, whether due to retirement, disability, or other circumstances, according to the pension disbursement status. However, in the event of death, pensions continue to be disbursed to their beneficiaries.
Implementation of the Social Insurance System Branches
The Occupational Hazards Branch of the Social Insurance System is mandatory for all workers, without any discrimination based on age, nationality, or gender. The Pensions Branch is also mandatory for all Saudi workers, without any discrimination based on gender, provided that the worker is under 60 years of age at the start of the system's implementation. If the worker was previously covered by the Social Insurance System and then returned to work at the age of 60 under the system, he or she will be treated according to specific provisions of the system.
Who is not covered by the Social Insurance System?
Groups that the Social Insurance System does not cover include civil servants, armed forces personnel, employees of sanctioned organizations under international or political or military missions, domestic workers, foreign workers Royal Commission for Short-Term Tasks, with duration less than three months, workers who work from home, and family-based workers (employees under family-based businesses with no other employee). Agricultural, herding, forestry, or maritime workers are likely not covered either, including fishermen, which excludes those covered under the Labor and Workers Law.
Employer Obligations Under the Social Insurance System
Employers who employ workers are under an obligation to abide by the Social Insurance System and the rules attached thereto. The rules further specify the registration procedures for registering both the employer and the employees.
Rate of Contribution for the Occupational Hazards Branch
The contribution rate for the Occupational Hazards Branch is 2% of the eligible wage, paid by the employer; this rate shall be increased up to 4% if the employer has not observed provisions concerning safety and health matters. Those subject to other categories of contributions, such as Saudis working in liberal professions and the self-employed, shall be responsible for doing their own contributions.
The Pensions Branch contribution has been fixed at 18%, with about 9% to be paid by the employer and around 9% by the worker, for Saudi workers, who were below 60 years of age at the system's inception, against the eligible wage and 18% of the designated subscribed wage shall be contributed fully by subscribers of liberal professions or self-employed.
The rates of contributions may be changed by a decision of the Council of Ministers and following a proposal of the Minister and a reasoned opinion of the Board of Directors of the General Organization for Social Insurance, on the basis of an actuarial study.
Regular Retirement Age Following Reforms of the Social Insurance System
The standard retirement age for employees, revised according to the Social Insurance System, is from 58 to 65 years old. The age will rise progressively, beginning four months above the current retirement age, based on the contributor's age at the effective date of the amendments.
The period of subscription needed to be qualified for early retirement has been changed to 25 to 30 years with the increase phased in 12 months from the current early retirement requirement.
Maternity Compensation Under the New Social Insurance System
The new Social Insurance System makes provision for social insurance, by the employer, to grant compensation to an employed woman when she is absent from work due to childbearing. The benefit is extended to members under the Occupational Hazards Branch of the current as well as the new Social Insurance System regardless of whether the member is Saudi or non-Saudi
In summary, social insurance plays a vital role in protecting the welfare of Saudis and residents. The continuous efforts and attempts to improve social security in the Kingdom also form the road toward economic stability and social justice. With continuous reforms toward improvement of coverage and payment, the system is adjusting to the needs of the different population in a fast-moving economy
The use of modern technology and raising public consciousness will guarantee that every individual will be informed of their rights and responsibilities on the social insurance schemes. As the country embraces Vision 2030, social excellence related to social insurance being enhanced will take a front seat in ensuring that society becomes strong and inclusive. In the future, social insurance will have to respond to demographic changes and economic fluctuations with suitable policies and proactive measures to keep the system sustainable and effective.
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