Saudi Arabia is making significant efforts to improve its pension systems and achieve the necessary oversight to achieve integrity and transparency.
These efforts are believed to have resulted in the country recording consistent results in the Mercer Institute Global Pension Index 2021 for the fourth year in a row.
Advanced outcomes
Saudi Arabia was ranked 26 in the index, with a total of 58.1 points, up from 57.5 last year.
It received 61.7 points in the adequacy index as a result of the high percentage of pension replacement and the increase in net family savings.
Meanwhile, it received 50.9 points in the sustainability index due to mandatory contributions designated for retirement benefits.
Due to the robust governance structure concerning the pension system, it also received the highest score of 62.5 in the Integrity Index.
The index is based on a weighted average of the sub-indicators of adequacy, sustainability, and integrity, and the kingdom seems to have performed well in all of them.
The report also lauded Saudi efforts to maintain integrity in regulated pension systems, subject to continuous government monitoring and scrutiny by external auditors.
The integrity index can be raised even higher by increasing the required level of communication with retirees and raising employee awareness about the importance of saving for retirement.
Tools for development
The study identified several key areas that require development in Saudi Arabia’s pension system, such as increasing the minimum support provided to the poorest individuals.
This was in addition to gradually elevating the government retirement age and improving labor force participation at an advanced age.
International results
Iceland had the highest total index value (84.2 points), followed by the Netherlands (83.5 points). Thailand had the index’s lowest value (40.6 points).
The countries with the highest score for each sub-indicator were Iceland for adequacy (82.7 points) and sustainability (84.6 points), and Finland for integrity (93.1 points).
India had the lowest score across the sub-indicators in terms of adequacy (33.5 points), Italy was the lowest in terms of sustainability (21.3 points), and the Philippines had the lowest in terms of integrity (35.0 points).
Mercer’s Index
This year’s Global Pension Index compared 43 pension-income systems worldwide, representing around two-thirds — 65 percent, to be exact — of the global population.
In addition, Iceland, Taiwan, the United Arab Emirates, and Uruguay have four new pension systems in the 2021 Global Pensions Index.
The World Pension Index compares each retirement system to more than 50 other indicators using a weighted average of the adequacy, sustainability, and integrity sub-indices.