The Saudi Arabian index value increased slightly to 60.5 in 2024 from 59.5 in 2023, according to the Mercer CFA Institute Global Pension Index. The kingdom's retirement income system is positioned 28th among 48 pension systems worldwide.
The Global Pension Index report said that the increase in overall index value for Saudi Arabia is due to clarification around the transition to retirement arrangements and updated demographic data.
Saudi Arabia’s retirement income system comprises an earnings-related pension or an earnings-related lump-sum retirement benefit for individuals who do not fulfil any of the retirement conditions.
In July 2024, Saudi Arabia enacted a new regulation that includes changes to the state pension age (increased to 65, subject to some transitional rules), contributions and accrual rates for new entrants.
Recommendations
The report said that the overall index value for the Saudi Arabian system could be increased by:
- Increasing the minimum level of support provided to the poorest aged individuals
- Increasing the labor force participation rate at older ages as life expectancies rise
- Improving the required level of communication to members from private pension arrangements
These recommendations were also listed in the 2023 edition of the report.
A summary of the Index scores of the Saudi retirement income system is as follows:
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Saudi Arabia - Summary
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2024
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2023
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2022
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Overall Global Pension Index rank
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28 (out of 48)
|
28 (out of 47)
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27 (out of 44)
|
|
Overall index score
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60.5
|
59.5
|
59.2
|
|
|
|
Adequacy sub-index rank
|
32
|
29
|
30
|
|
Adequacy sub-index score
|
61.1
|
61.5
|
61.4
|
|
|
|
Sustainability sub-index rank
|
20
|
23
|
20
|
|
Sustainability sub-index score
|
58.0
|
54.9
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54.3
|
|
|
|
Integrity sub-index rank
|
42
|
40
|
36
|
|
Integrity sub-index score
|
62.9
|
62.9
|
62.5
|
The Mercer CFA Institute Global Pension Index uses three sub-indices — adequacy, sustainability and integrity — to measure each retirement income system against more than 50 indicators, such as home ownership, economic growth and operating costs.
Vietnam is the only addition this year to the pension markets listed in the Index, raising the total number of systems evaluated from 47 to 48.
The study shows that the Netherlands, Iceland, Denmark and Israel continue to be assessed as having the best retirement income systems worldwide, each of them receiving an ‘A’ grade in 2024, with scores exceeding 80 — similar to 2023.