Saudi Gazette Introduction The existing Benefits Transferability Law (BTL) deals with civil and military retirement benefits transfers under the current insurance systems called the General Organization for Social Security (GOSI) issued under Royal Decree No. (M/53), dated 20/09/2003 and enacted on 25/12/2003. BTL safeguards subscribers' salary/wage monthly deductions for retirement purposes providing added security and benefits. BTL Objectives It combines a subscriber's contribution periods during public sector employment when he moves to private sector employment, and vice versa. BTL treats a subscriber dues based on the provisions of the latter employment system. 1. BTL facilitates movement between public and private sectors and the exchange of experience between sectors. 2. It increases the rate of Saudization in the private sector and supports Saudi Arabia's plans for privatization. Beneficiaries of BTL • A subscriber who is subject to the Civil or Military Retirement System and who has previously contributed to the Social Insurance System, or vice versa, may aggregate the two employment periods to his retirement contribution according to the last employment system. • A subscriber may move from one system to another more than once. Such movement shall not deprive him the right to benefit from aggregation without prejudice to his current dues which remains valid. The system under which he last worked is defined as the last system. • A subscriber has the option of requesting aggregation. • A subscriber may cancel the request to aggregation even if the request has been approved. The subscriber should submit cancellation request to the relevant authority responsible for implementing the system under which he last worked. He should submit the request prior to the end of the contribution period under the last employment system. • When a subscriber cancels his request, he could reapply for benefit aggregation prior to the stated deadline. Contribution Aggregation Conditions 1. A subscriber shall submit his application within two years of the date of his appointment to the new position. 2. A subscriber must not have received compensation or pension for that period. 3. A period to be aggregated shall not be less than a year. 4. A subscriber shall not be over 59 years old when requesting aggregation. 5. Pension granted according to the first system must not be due to disability. 6. The aggregated contribution terms shall be supplementary terms entitling to a pension prior to the age of 60 in the last system. A subscriber shall complete the period required by the current employment system. (This condition shall not be applicable if service is terminated due to death, disability or dismissal.) Aggregation and Required Documents A subscriber should submit his application for benefits aggregation to the respective authority in charge of implementing the first system retirement benefits as follows: • If the aggregated period falls under the jurisdiction of the Social Insurance System, the subscriber should submit his application to the General Organization for Social Insurance (GOSI). The following documents should be enclosed: (1) Copy of the national identification card. (2) Copy of the decision of appointment in the last position subject to the Pension Law. (3) A certificate which shows that he still carries out the position functions. • A subscriber should submit application to the Public Pension Agency (PPA) if retirement contribution is subject to the Civil or Military Retirement System. The following documents should be enclosed: (1) A copy of the national identification card. (2) A copy of a statement identifying the period to be aggregated (or a copy of the dismissal from civil or military service). Application may be submitted as follows: • A subscriber may submit his application to the respective authority in charge of implementing the first employment system headquarters or its branches. • A subscriber may submit his application through his employer or by registered mail to the respective authority. • In all cases, the application must be submitted to the respective authority in charge of implementing the first employment system prior to the end aggregation deadline. The aggregated contribution periods between civil / military retirement systems may not be used to qualify a subscriber for an early retirement pension before the age of 60 (except in cases of death, disability or dismissal.) A subscriber must complete the service period required by the last system in order to be qualified for early retirement pension. BTL does not allow repaying of the amounts already refunded for previous service under Civil or Military Retirement System, or to recalculate a service and aggregate it with the current service under the Social Insurance System. The deadline for filing aggregation applications by subscribers who were in employment on 25/12/2003 and those who have left employment before 25/12/2003 had passed 02/12/2005. Method of Calculating Pension When a period is aggregated between the two systems, the pension is settled according to the following: 1. If the Civil or Military Retirement System is the last system, the settlement of the pension is done by calculating the entire duration of periods between the two systems in accordance with the provisions of the Civil or Military Retirement System and on the basis of the last salary paid to the employee in current employment system. 2. If the Social Insurance System is the last system, the settlement of the pension is done by calculating the entire duration of periods between the two systems in accordance with the provisions of the Social Insurance System and on the basis of the average wage in the last two years. If this average exceeds the last salary in the first system (for the contribution period in the Civil or Military Retirement System) multiplied by the defined factor mentioned in the Actuarial Table, the pension for the two periods is calculated as follows: a. A pension is calculated for the contribution period served under the relevant insurance system and based on the average wage in the last two years according to the regulations of such a system. b. Another pension is calculated for the period served under the Civil or Military Retirement Scheme, based on the last wage / salary multiplied by the defined factor mentioned in Actuarial Table. The total pension will be the result of paragraphs (a) and (b) above, and paid to subscriber as one pension. How to calculate pension if the last employment is Civil or Military Retirement Say the contribution period is 5 years, the paid wage is SR4,000. Contribution to Civil or Military Retirement System is 30 years and the last wage is SR12,000. Retirement pension is: 12,000 × 35 ÷ 40 = SR10,500. Calculating pension when last employment system is Social Insurance The contribution period in Civil/Military Retirement System is 5 years. The last wage is SR4,000. The contribution period in the Social Insurance System is 30 years ended with the retirement of subscriber and his average wage in the last two years is SR12,000. Since the last salary in the Civil/Military Retirement System after multiplying it by the defined factor mentioned in Table 5 exceeds the average SR4,000 × 3.24340 = SR12,973.60, then, pension will be settled on the basis of the last two-year average. Hence, Retirement Pension is SR12,000×35 ÷ 40 = SR10,500. The contribution period in the Civil/ Military Retirement System is 5 years and last wage is SR12,000. Contribution period to Social Insurance is 30 years ended with the retirement of the subscriber and his average wage is SR12,000. Since the last wage in the Civil or Military Retirement System after multiplying it by the defined factor mentioned in Table 5 is less that the average SR2,000 × 3.24340 = SR6,486.80, then the pension will be settled as follows: Pension for contribution under Civil/Military Retirement System: SR2,000 × 3.24340 × 5) ÷ 40 = SR810.85. Therefore, pension for contribution under Social Insurance is SR12,000 × 30 ÷ 40 = SR 9,000. The total pension then equals the sum of SR810.85 + SR9,000 which is SR9,810.85. __
