Cabinet approves mechanism to calculate actuarial impact of pension funds

The Council of Ministers approved Resolution No. 687, regarding the actuarial impact on pension funds within retirement systems resulting from transformation and privatization processes.

The decision also included amendments and the cancellation of several provisions related to retirement and privatization regulations.

First, the resolution recognizes that the actuarial impact on pension funds arising from transformation and privatization is inherent to the nature of these systems, with the Social Security Corporation periodically preparing actuarial studies to quantify this impact and compensate the funds through reactive financing if they face financial shortfalls.

Second, it establishes the calculation mechanism for the actuarial impact, focusing on net actuarial gains and losses across all pension funds and considering only previously accrued rights.

In addition, the resolution terminates Articles 26 and 27 of the rules governing the treatment of employees and workers in sectors targeted for transformation and privatization.

It further ends Articles 5 and 6 of the rules on treatment of Saudi employees in sectors targeted for privatization, when transferring them to the private sector.

Moreover, the resolution cancels provisions related to committees formed to prepare comprehensive studies on additional financial costs for the civil and social insurance retirement systems.

Outcomes of technical committees formed to determine costs arising from transformation or privatization that were not approved by the Council of Ministers were nullified.

The Cabinet also mandated the completion of transformation and privatization procedures for entities with issued decisions based on the aforementioned provisions.

The resolution requires entities subject to transformation or privatization to notify the Social Security Corporation of such decisions within 30 days and provide all requested employee data within the same timeframe.

Paragraph 5 of Article 6, relating to the Benefits of Exchange System between the Civil and Military Retirement System and the Social Insurance System, was omitted.

Finally, the Cabinet cancelled its previous decisions regarding payment of additional financial costs for the civil and social insurance retirement systems that have not yet been settled, in line with the above provisions.