Social Security System in Saudi Arabia


The working force is the most important group of people in any nation because they are the drivers of the economy. These people are productive and they provide the highly required labor for production. However, a time comes when people cannot work anymore due to age factor. Income of these people reduces and affording some basic needs becomes a problem. Moreover, there are the disabled people who are unable to work and need to be taken care of by the government.

This groups of people need to be aided to afford basic social amenities and other basic needs. In this regard, the social security service is an important part of any government. Governments have a duty of taking care of its citizenry. The old people and disabled form a special group which cannot be assumed. In Saudi Arabia, the social security system is designed to take care of these and other groups of people.


Social security refers to a system where working people contribute money towards a common fund so that they gain some benefits when they get old. Instead of this money just being stored, it is given out to people who qualify to receive social security checks at that given time (Mufti 52). People employed in various institutions are taxed a certain percentage of their income which goes to the social security fund. The contribution goes on throughout one’s productive life. In a nutshell, social security fund is a revolving fund where the working generation pays the retired generation. Social security began as early as 1800s in other countries though it gained much recognition in the years following World War I.


The social security program has been highly beneficial to many people in many nations. To begin with, social security fund has helped to put many old people out of poverty. There are many people who are not good savers of money. During their employment, these people usually spend a huge percentage of their income. Consequently, they do not invest for their old age. If they are left without any care, these people will lack basic necessities. In this regard, social security is important because it ensures that these people do not suffer in their retire ages (Attarian 17). Moreover, people receiving social security checks spend their money purchasing basic necessities. This increases demand of a country. It is important to note that demand is quite crucial in enhancing production of a country as well as in spurring economic development.

Moreover, social security is a form of forceful savings. Social security is taken as a statutory deduction where money is deducted before payment is deposited into people’s accounts. In this way, it is not optional whether one will deposit for old age or not. This ensures that people save for their retirement. Not only does this ensure that people will always have a secure financial future, but also that living standards does not change whenever one retires from active employment.

Arguably, the best benefit of social security is that it is self funding and does not require money from other sectors to finance the program. Additionally, social security is a form of insurance that people can buy for their old age. It is a program through which people safeguard their future to ensure that they will have an income in the future (Harper, Aswin and Charles 64). By extension, this means that people who contribute to the social security fund are secured against the risk of losing their income in case of accidents that can lead to incapacitation or any other form of disability. Most importantly, social security is a moral obligation that governments have been able to successfully execute. It is a program that is meant to ensure that people do not suffer while there is something that can be done.

Saudi’s Security System

In Saudi Arabia, social security is integrated into the ministry of labor. The system caters for people who are unemployed as well as widows and widowers. Additionally, the system provides support to orphans, the disabled and victims of natural disasters. The law that instituted social security system was implemented in 1973 though it had been proposed in 1969. The system is taken as a social insurance program where people contribute 9% of their gross income while they are working and get paid when they retire (Mufti 68).

The system covers the private sector and the public sector. However, civil servants and military personnel have a special scheme that covers them. Nonetheless, they can request to be members of the public social insurance system. For people who are self employed, those working in foreign countries and people who cannot be compelled to join the public social security system, membership is optional.

Funding is by contribution where employed people contribute 9% of their gross income and their employers also contribute 9% of the payroll. For the self employed people, payment is 18% of the declared income. Among the requirements for one to qualify for the benefits is that a person must have attained the age of 60 for men and 55 for women. For disability, the person should be assessed to be incapacitated before attaining the legal retirement age (Harper, Aswin and Charles 78). It should be noted that social insurance system also covers for work injury and occupational diseases. This is a form of risk management where people are insured so that in case they are injured while working, they can be able to lead a more or less normal life.

Comparison with the American System

The social insurance system of Saudi Arabia is relatively young compared with that of the United States of America where the program started as early as 1935. However, the two systems have a common agenda of caring for the old, the disabled and survivors. In both systems, contribution of employees and employers is the main source of finance for the programs. Additionally, in both countries the government is responsible for regulating operations of the social security systems. Both governments also subsidize the social programs.

Regarding the qualification for the benefits, the two countries are slightly different. While the official retirement age in Saudi Arabia is 60, the earliest age that a person can qualify for benefits in the U.S. is 62 (Pieters 29). Another difference is depicted in the manner in which the social security money is held. In Saudi Arabia, the money is held as one single fund while in U.S. the money is deposited in several funds which include, Federal Disability Insurance Trust Fund and the Federal Hospital Insurance Fund among others. Moreover, the program in the U.S. integrates many other social welfare programs unlike in Saudi Arabia.

The Future of Social Security

The social security program is designed in a manner that money flows from contributors to beneficiaries. People who are currently working contribute money which is paid to the retirees. When the working force will be approaching retire, there would be other young people who would contribute to the fund.

It is important to note that this is only possible as long as the ratio of people in employment exceeds that of retirees. Unfortunately, in the future there is a probability that the number of retirees will exceed that of people in employment. This will be problematic because the social security fund will not be able to fund itself. To continue paying social security checks, the fund will either have to source for funding elsewhere or reduce the amount paid to beneficiaries (Pieters 48).

On the same note, there have been arguments as to whether it is sensible for people to have their money deducted and paid into social security programs. People have argued that the money deposited into social security funds could earn more returns if it is invested somewhere else. Social security funds take money and pay less than people could have got if they were left free to choose other investment plans (Attarian 23). Additionally, identity theft is very rampant and people not qualified are finding ways of getting paid other people’s money.


Social security is very important in any country because there will always be old people. On the same note, the dependants of employed people need to be assured that they can get basic needs in case of any eventuality. Moreover, it is the moral obligation of a nation to take care of its people especially the vulnerable groups and social security is one way of accomplishing this duty. It is an insurance program that is designed to prepare people for their retirement life. Though the Saudi system might be different from that of United States of America, they both work towards the same objective.

Works Cited

Attarian, John. Social Security: False Consciousness and Crisis. Piscataway: Transaction Publishers, 2002. Print.

Harper, Robert A., Aswin Subanthore and Charles F. Gritzner. Saudi Arabia. New York: Infobase Publishing, 2007. Print.

Mufti, Mohammed H. Healthcare Development Strategies in the Kingdom of Saudi Arabia. New York: Springer, 2000. Print.

Pieters, D. Social Security: an Introduction to the Basic Principles. Alphen aan den Rijn: Kluwer Law International, 2006. Print.

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