Annuities Branch

What the annuities branch is

The annuities branch (فرع المعاشات), also called the pensions branch, is one of the branches of social insurance in Saudi Arabia, administered by the General Organization for Social Insurance (GOSI). Under the Social Insurance Law (نظام التأمينات الاجتماعية) issued by Royal Decree M/273, it is the only one of the three branches whose contribution rate rises in steps on dates fixed in advance. Its compulsory contribution is borne in equal halves by the subscriber and the employer, and it is calculated on the contributory wage (الأجر الخاضع للاشتراك).

That description holds for compulsory coverage. A subscriber who joins the annuities branch voluntarily carries the whole contribution, as explained further on, and an employee who falls under the earlier system pays a rate that does not step at all.

The annuities branch is not a branch of the establishment

The word branch in this term does not mean a branch of an establishment. In the social insurance system, a branch is an insurance division with a scope of application and a contribution rate set for it alone. The branches of an establishment are administrative or geographic units, run with the tools and permissions the establishment gives them. The word is the same, but the two meanings do not meet. Confusion between them can arise when the branch shown on a contribution statement is taken to be a place of work.

Who the annuities branch applies to

Article 14 of the Social Insurance Law applies the annuities branch to Saudis (السعوديين). The scope of the other two branches is set in other articles of the same law, and the wording differs from one to the next:

• Article 14 of the Social Insurance Law, on the annuities branch, refers to Saudis.
• Article 43 of the Social Insurance Law, on the unemployment insurance branch, also refers to Saudis.
• Article 28 of the Social Insurance Law, on the occupational hazards branch, applies compulsorily to all employees and all workers working inside the Kingdom, and carries no nationality qualifier.

The differences between the three provisions lie in their texts as they stand. The law does not gather them into a single sentence, and no sentence of that kind should be attributed to it. A reader who places the three articles side by side sees the contrast without any summary in between.

Article 14(3) of the Social Insurance Law also opens the annuities branch, on a voluntary basis, to Saudi workers working outside the Kingdom who have no employment relationship with an employer headquartered inside it. That route, and the documents it requires, are described under voluntary contributor.

A provision in another law builds on the annuities branch. Article 3(3) of the Unemployment Insurance Law (نظام التأمين ضد التعطل عن العمل), issued by Royal Decree M/18, extends SANED, subject to the age limits in the two paragraphs before it, to whoever is compulsorily subject to the annuities branch. That is the rule of the Unemployment Insurance Law, which Clause Fourth of Council of Ministers Decision No. 1022 keeps in force for the subscribers described in the next section. For a subscriber under the Social Insurance Law, Article 43 of the Social Insurance Law sets the scope of the unemployment insurance branch directly.

Which law governs a subscriber in the annuities branch

The Social Insurance Law issued by Royal Decree M/273 took effect on 3 July 2024, but it did not reach every subscriber at once. Clause Second of Council of Ministers Decision No. 1022 excludes two groups from it: subscribers who have contribution periods before that law took effect for which they have not been compensated, whether those periods fell under the Civil Retirement Law (Royal Decree M/41), under the 1421H Social Insurance Law (Royal Decree M/33) or under both; and people already entitled to a pension under either of those laws before it took effect.

Clause Fourth of Council of Ministers Decision No. 1022 keeps the 1421H Social Insurance Law, the Civil Retirement Law and the Unemployment Insurance Law in force for those two groups, subject to the exceptions in Clauses Fifth and Sixth. Clause Fifth concerns the annuities branch alone: for part of the excluded group it sets a new statutory pension age and new thresholds for early pension, and Clause Fifth of Council of Ministers Decision No. 1022 is the text to consult for them.

The annuities branch contribution rate, by date

The annuities branch rate is not a single number to memorise. It depends on which law governs the employee, under the test in Clause Second of Council of Ministers Decision No. 1022, and under the newer system it then rises on a published schedule. A bare figure printed without its date becomes wrong on a day that is known in advance.

The existing system applies to the two groups that Clause Second of Council of Ministers Decision No. 1022 leaves outside the Social Insurance Law issued by Royal Decree M/273. Its annuities branch rate is 9% from the employee and 9% from the employer.

The new system, under the Social Insurance Law issued by Royal Decree M/273, applies to every subscriber outside those two groups, such as an employee first registered with GOSI on or after 3 July 2024. Its annuities branch rate rises by half a percentage point on each side each year from 2025 to 2028, and each step takes effect on 1 July.

The first date in the table is the date the system took effect, and every later step falls on 1 July. Paragraphs (1) and (2) of Clause Third of Council of Ministers Decision No. 1022 set the steps by which the annuities branch rate reaches 22% in total, divided equally between the employer and the subscriber for compulsory contributions. The dates in the table are those GOSI publishes in its guide to the increase in contribution rates.

Paragraph (3) of Clause Third of Council of Ministers Decision No. 1022 applies the same steps to voluntary subscription, on the condition that the subscriber bears the whole contribution.

The annuities branch rate on its own, and the totals around it

The table gives the rate of the annuities branch alone. The SANED rate and the occupational hazards rate are added on top of it and do not step: 0.75% each from the employee and the employer for SANED, and 2% from the employer for occupational hazards, except that for civil servants paragraph (4) of Clause Third of Council of Ministers Decision No. 1022 leaves the start of the occupational hazards branch to a later decision of the Council of Ministers. The dated tables for every branch are set out under GOSI contributions.

So from 1 July 2026, for a private sector worker under the new system, the worker’s total is 10.75% and the employer’s total is 12.75%. Publishing 10.75% as the annuities branch rate is an error of category. The figure is correct as a sum but wrong as a rate, because it adds another branch to this one.

A worked example shows the difference. Take a Saudi worker in the private sector, first registered with GOSI on or after 3 July 2024, whose contributory wage is SAR 10,000 a month:

• From 1 July 2026 the annuities branch takes 10% on each side, which is SAR 1,000 from the employee and SAR 1,000 from the employer.
• Adding SANED at 0.75% on each side brings the employee’s deduction to SAR 1,075. The employer, which also pays occupational hazards at 2%, pays SAR 1,275.
• From 1 July 2027 the annuities branch rate becomes 10.5% on each side, so the same wage gives SAR 1,050 from each.
• An employee on the same wage who falls in one of the two groups excluded by Clause Second of Council of Ministers Decision No. 1022 pays 9% to the annuities branch, which is SAR 900, and the employer pays the same amount.

The gap of SAR 100 between the two annuities branch figures, for the same wage in the same month, has a single cause: the law that governs each employee.

The annuities branch base: a ceiling and a floor

Article 8 of the Social Insurance Law sets the ceiling. The maximum wage or salary subject to contribution is SAR 45,000 a month. For an employee under the new system whose wage subject to contribution would otherwise come to SAR 50,000, the annuities branch contribution from 1 July 2026 is calculated on SAR 45,000: 10% of it, which is SAR 4,500 from each side, and not SAR 5,000.

For the floor, the same Article 8 of the Social Insurance Law names no figure. It refers instead to the minimum wage or salary set by the competent authority, below which the amount on which contributions are calculated may not fall. In the sources we reviewed, we found no decision of that authority setting the figure. The number in circulation as a floor for the base belongs to the existing system alone, and placing it beside the new system’s rates moves a rule from the system it governs to one it does not. What enters the base, and how each part is valued, is a separate term, the contributory wage.

Annuities branch benefits and where they are set

The term is defined above by its contribution: who is subject to the annuities branch, at what rate and on what base. The conditions for entitlement to a pension, the contribution periods it requires, the age at which it falls due and its amount have their own provisions in the social insurance law that governs the worker, and no rule on them is drawn from the definition. For a subscriber in a group excluded by Clause Second of Council of Ministers Decision No. 1022, that law is the 1421H Social Insurance Law or the Civil Retirement Law, or both, kept in force by Clause Fourth of Council of Ministers Decision No. 1022, with the exceptions in Clause Fifth. A question about a particular pension is for GOSI directly, and an estimated figure is no substitute for its answer.

Keeping an annuities branch figure current

Under the new system the rate in the table changes on 1 July each year until 2028, so the row in force needs checking at every step. The row marked as in force is the one dated 1 July 2026, and the next change falls on 1 July 2027. A figure quoted from the table needs the date of its row beside it, so that a reader can tell when it stops being current.

This is an explanation of the concept and of the statutory provisions cited, not legal advice.