Saudi Arabia is preparing to launch a groundbreaking voluntary pension and savings program that will include foreign workers for the first time. This initiative, known as the Public Pension and Savings Program, was highlighted in the International Monetary Fund’s (IMF) latest Article IV consultation report, as reported by Al-Eqtisadiah newspaper.
Encouraging Household Savings
The new program aims to encourage household savings while addressing the significant volume of remittances sent abroad. In 2024, foreign workers in Saudi Arabia remitted SR144.2 billion ($38.4 billion), reflecting a 14% increase compared to the previous year. Over the past decade, cumulative remittances have reached an astonishing SR1.43 trillion.
In the first quarter of 2025, Saudi Arabia’s social insurance system reported 12.8 million subscribers, with nearly 77% being foreign workers. The new savings plan offers these workers an opportunity to save and invest within the Kingdom instead of sending most of their earnings overseas. This shift could significantly impact the local economy.
This initiative follows major pension reforms approved in July 2024 which increased the retirement age, extended contribution periods, raised contribution rates, and narrowed benefit entitlements. The IMF expects these measures to enhance the long-term sustainability of the pension system, although immediate fiscal savings may not materialize.
IMF’s Positive Outlook
The IMF welcomed the extension of the new savings program, calling it a crucial step that could “significantly enhance household savings and reduce external remittances.” Furthermore, the IMF emphasized the scale of the General Organization for Social Insurance’s (GOSI) assets, estimated at about 32% of Saudi Arabia’s GDP, urging for greater financial transparency and clearer investment allocations.
In conclusion, Saudi Arabia’s new pension and savings program represents a significant development for foreign workers, promoting savings and investment within the Kingdom while reducing reliance on remittances.
