Saudi Arabia is considering revamping the kingdom's pension system to require citizens to work longer and contribute more, another hit to living standards that could undermine public support for Crown Prince Mohammed bin Salman's efforts to reshape the oil-reliant economy.
The government — faced with an estimated actuarial gap of 800 billion riyals ($213 billion) at the state-controlled pension fund — is weighing proposals to increase the retirement age, according to three people familiar with the matter, who asked not to be identified to discuss confidential deliberations. It could also require workers to contribute more of their salaries to the General Organization for Social Insurance, or GOSI, which manages both public and private sector pensions, the people said.
A final decision on the details of the changes and whether to implement them has not yet been made, the people said.
Saudi officials have warned the current system is unsustainable. That's a quandary pension programs the world over have faced as people have lived longer — but with a decidedly Saudi twist.
The average Saudi life expectancy is 75 years, and although the official retirement age is about 60 for men and women, about a third retire early after working 25 years in the private sector or 20 in the civil service. That compares to an average retirement age of 64.3 years for men and 63.5 years for women in member countries of the Organization for Economic Cooperation and Development.