Public Pension Agency Saudi Arabia : Benefits Transfer Agreement

Name of the Organization : Public Pension Agency
Type of Facility : Benefits Transfer Agreement
Location: Riyadh
Country: Saudi Arabia

Official Website : http://www.pension.gov.sa/sites/en/pensionscheme/benefitstrans/Pages/default.aspx

Benefits Transfer Agreement :

Benefit transfer agreement was issued between the civil pension scheme, military pension scheme and social insurance scheme under the royal decree NO D / 53 dated 23/7/1424 H and entered into force as of 1/11/1424 H.

Related : Public Pension Agency Saudi Arabia Beneficiaries Account Statement : www.statusin.org/5303.html

such agreement contributed to serving subscribers and saving their time in addition to providing them with more assurance and benefit and facilitated moving between public and private sectors for the purpose of common benefit from experiences of the two sectors. Additionally, it contributed to providing pensions of proper values, supporting the Saudization efforts in private sector and creating new job opportunities in public sector.

When a citizen moves from working in public sector to private sector or vice versa, the benefit transfer agreement came to join a citizen’s services together in order to receive a pension or to improve the pension the citizen was supposed to receive since service terms, if separated shall be too less to qualify the citizen to be entitled to receive a pension. Here comes the benefit transfer agreement to confer on a subscriber the right to add the service and get paid one single pension for the two services in both retirement and insurances.

This agreement emphasizes the state’s keenness and its wise leadership to take care of employees of both public and private sectors in addition to maintaining their retiring rights to reach material and social levels appropriate for them.

Purpose:
** Organizing service terms integration and maintaining the employees’ rights in both public and private sectors through joining the subscription terms in case of moving between the sectors under coverage of the BTA in order to enable subscriber to receive the retirement pension or improving employee’s pension.
** Facilitate moving between public and private sectors.
** Sharing experiences between different sectors.
** Enhance Saudization rates in private sector.
** Enhance the KSA approach towards privatization of some institutions in addition to contribution to the success of national plans in such field.

Beneficiaries:
** Such scheme allows each subscriber subject to civil or military pension scheme with a pervious subscription term subject to social insurance or vice versa to claim for inclusion of such term to the subscription term the last scheme.
** Inclusion right is not limited only the subscriber who is on job, but also includes extended to include the subscriber whose subscription term is terminated in both schemes before applying such scheme.
** The scheme also emphasizes on the subscriber’s freedom to move from one scheme to another more than once without depriving such subscriber from benefitting from the inclusion option such that subscriber’s right in inclusion remains valid where the scheme under which a subscriber returned to work becomes the last scheme in terms of applying the provisions thereof.
** Subscription terms inclusion is deemed optional for a subscriber who shall be entitled either to claim for inclusion or refrain from the same.

Subscription Terms Inclusion:

** A subscriber who moved from work subject to civil or military pension schemes to a work subject to social insurance or vice versa shall be entitled to claim for including the term included in subscriber’s favor under the first scheme to subscriber’s term calculated in the latter as per the following conditions:
** The subscriber shall apply within two years as of the due date (1/11/1424 H) for those who are on the job on such date and for those who quitted such job before such date and within two years as of the joining date for those who join the same after the due date.
** A subscriber may not have received a remuneration or pension for such term.
** The term required to be included may not be less than one single year.
** A subscriber’s age may not be more than 59 years upon application for the inclusion “except for subscribers who quitted the job subject to the two schemes prior to the due date as well as the subscribers who are still on the job subject to the last scheme on due date”.
** Pension in the first scheme is not due because of disability.
** The included subscription terms are not terms supplementary for retirement pension entitlement before reaching the age of sixty years in the last scheme. However, a subscriber shall complete the term required for such scheme unless the inclusion reasons are the result of allocation or in the service termination due to death, disability or coordination of service. In case of inclusion resulting from allocation, it is not allowed to receive both retirement pension and the salary of the job under either the civil or the military pension schemes or the social insurance scheme.

Cancellation of Inclusion Application:
The BTA executive regulations entitled the subscriber the right to cancel the application for services inclusion even if the approval is issued by the concerned authority on the inclusion application if the subscriber finds that his own benefit does not require inclusion thereof. The cancellation application shall be submitted as per the following restrictions:
1. A subscriber may not cancel its inclusion application for its subscription term in the first scheme saving that the same shall be provided prior to receiving the insurance or retirement dues. After such cancellation, a subscriber may not apply for inclusion one more time unless the grace defined for applying is not expired yet.
2. The application shall be submitted to the concerned authority to apply the last scheme.

Pension Settlement:
** Upon subscriber’s service termination in the last scheme with the conditions of inclusion and benefitting from the retirement pension, pension shall be settled on basis of calculating all terms of service in both schemes as follows:
** In case the pension scheme is the last, pension shall be settled by calculating all terms between both schemes as per the provisions of pension scheme and on the basis of the last salary received by the employee in such scheme.
** In case the social insurance scheme is the last scheme, pension shall be settled through calculating all terms of service between the two schemes and on the basis of salary average in the last two years unless such average exceeds the last salary in the first scheme (subscription term in pension scheme) multiplied to the coefficient defined under actuarial table NO (5) attached to scheme.

In such case, due pension shall be calculated for the two terms as follows:
** A pension shall be calculated for the subscription term spent under the coverage of social insurance scheme on basis of the last subscription average in the last two years defined under the provisions of such scheme.
** Another pension shall be calculated for the term calculated under the first scheme on basis of the last salary in such scheme as per the provisions thereof multiplied to the coefficient defined under the actuarial table NO (5) attached to the scheme. Such pension shall be added to the pension allocated in paragraph (A) above and both them shall be paid to the subscriber as one single pension.

Examples of calculating the pension resulting from inclusion of terms if the last scheme is (Civil Pension Scheme):
Subscription term in the social insurance scheme: 6 years.
Subscription term in the civil pension scheme: 30 years.
Last salary in subscription term in civil pension scheme: SR 12000
Retirement Scheme = 6 + 30 x 12000) ÷ 40 = SR 10800

Examples of calculating the pension resulting from inclusion of terms of the last scheme is (Military Pension Scheme):
Subscription term in the social insurance scheme: 5 years.
Subscription term in the military pension scheme: 20 years.
Last salary in subscription term in military pension scheme: SR 7744
Retirement Scheme = 5 + 20 x 774) ÷ 40 = SR 5531,43

Examples of calculating the pension resulting from inclusion of terms of the last scheme is (social insurance Scheme):
Subscription term in the civil pension scheme: 6 years.
Last salary in subscription term in civil pension scheme: SR 7000
Subscription term in social insurance scheme: 15 years
Salary average in the last two years in subscription term in social insurance scheme is SR 14000.
In such case, the salary average in the last two years if subscription the social insurance scheme = SR 14000 exceeding the result of multiplying the salary to the subscription term in civil pension scheme to coefficient of the actuarial table NO (5) = 7000 x 1.80094 = 12606,58 > 14000.

Therefore, the retiree shall receive two pensions as follows:
A pension for the subscription term in civil pension scheme: (1.80094× 6 × 7000) ÷ 40 = SR 1890.99
A pension for the subscription term in social insurance scheme:(14000 x 15) ÷ 40 = SR 5250

Total Pension = 1890.99 + 5250 = 7140.99