The Law of Benifit Exchange

The Law of Benifit Exchange

 
 
The Law of Benifit Exchange Rights between the Civil and Military Pension Laws and the Social Insurance Law issued by the Royal Decree No. (M/53) dated 23/07/1424 H. and came into effect on 01/11/1424 H. represents a distinguished starting that contributes to the service of contributors, maintains their rights and provides them with more comfort and welfare.
 
 
Aim of the Law: 
1.Aggregate contribution periods for workers in the public sector when moving to work in the private sector or vice versa. They are treated according to the provisions of their last scheme and can, as a result, either be entitled to a pension or improve their pension. 
2.Facilitate the movement of workers between the public and private sectors and exchange of experience between them. 
3.Raise Saudization rates in the private sector and support the State's plans for privatization. 
لتحميل نظام تبادل المنافع بين نظامي التقاعد المدني والعسكري ولائحته التنفيذية، اضغط هنا
1. ضم مدد الاشتراك للعاملين في القطاع العام عند انتقالهم للعمل في القطاع الخاص أو العكس، ومعاملتهم حسب أحكام النظام الأخير بحيث يتمكن المشترك من الحصول على المعاش أو تحسين المعاش.
2. تسهيل حركة الانتقال بين القطاعين العام والخاص، وتبادل الخبرات بينهما.
3. رفع معدلات السعودة في القطاع الخاص، ودعم خطط الدولة نحو الخصخصة
  • •    Each contributor subject to the Civil or Military Retirement Scheme having a previous contribution period under the Social Insurance Scheme, or vice versa, may ask to aggregate such a period with his contribution under the last scheme. 
    •    The contributor may move from one scheme to the other more than once. This will not deny him the right to benefit from the possibility of requesting aggregation and he will maintain his right in such a movement. The scheme, under which the work he returned to is covered, will be considered as the last scheme. 
    •    Requesting aggregation is an optional right for the contributor. He may or may not request aggregation. 

  •  The contributor may withdraw his application for aggregation even if an approval was granted. The contributor should submit his application to withdraw his request to the competent institution in charge of implementing the last scheme. Such a withdrawal should take place prior to the end of his period of contribution under the last scheme. 

  • •    After withdrawing the application, the contributor may reapply for aggregation provided that the time-limit prescribed for submission of application has not expired yet.   

1.The contributor must not have received a lump sum compensation or pension for that period. 
2.Period required to be aggregated must not be less than one year.
3.The age of the contributor must not exceed the age of 59 when requesting aggregation.
4.The pension granted from the first scheme must not be entitled due to a disability.
5. Aggregated contribution periods must not be supplementary periods entitling to a pension prior to the age of 60 in the last scheme. The contributor must complete the period required by such a scheme. This restriction is not applicable when termination of service is of disability, death or dismissal reasons.  
Procedures for Applying for Aggregation and Required Documents 
The contributor submits his application for aggregation to the competent institution in charge of implementing the first scheme using the adopted form (Aggregation-1), according to the following:

  
a.The contributor should submit his application to GOSI if the contribution period needed to be aggregated is under the Social Insurance Scheme. The application should enclose the following:
1.A copy of the national identification card, 
2.A copy of the appointment decision in the employment covered under the Civil or Military Retirement Scheme,
3.A statement proving that he is still in employment. 
As for those who left the service, such a fact should be indicated in the aggregation form.


b.The contributor should submit his application to the Public Pension Agency (PPA) if the contribution period needed to be aggregated is under the Civil or Military Retirement Scheme. The application should enclose the following: 
1.A copy of the national identification card, 
2. A copy of the statement identifying the period needed to be aggregated or a copy of the dismissal decision from civil or military service.


Application may be submitted as follows: 
- The contributor may submit his application to the competent institution in charge of implementing the first scheme or its field offices/branches, 
- The contributor may submit his application through his own employment. 
- The contributor may submit his application by registered mail to the competent institution. 
In all cases, the application must be submitted to the competent institution in charge of implementing the first scheme prior to the expiration of the time-limit for aggregation.


Note:
- The aggregated contribution periods between the Civil/Military Retirement Schemes and the Social Insurance Scheme shall not be considered as complementary to qualify the contributor for an early retirement pension before age of 60, unless his periods were aggregated as a result of privatization or his service was terminated as a result of death, disability or dismissal. The contributor must complete the service period required by the last scheme in order to be qualified for an early retirement pension.

- The Law does not allow repaying of the amounts already been refunded for previous service under the Civil or Military Retirement Scheme to re-calculate such a service and aggregate it with the current service under the Social Insurance Scheme.


- The time-limit for contributors who were in employment on 01/11/1424 H. and contributors who have left employment before that date had expired since 30/10/1426 H. Their application for aggregation is no longer accepted.

When a period is aggregated between the two schemes, the pension is settled according to the following:


1.If the Civil or Military Retirement Scheme is the last scheme: the settlement of the pension is done by calculating the entire duration of periods between the two schemes in accordance with the provisions of the Civil or Military Retirement Scheme and on the basis of the last wage paid to the employee in this scheme. 
2.If the Social Insurance Scheme is the last scheme: the settlement of the pension is done by calculating the entire duration of periods between the two schemes in accordance with the provisions of the Social Insurance Scheme and on the basis of the average wage in the last two years. 
If this average exceeds the last wage in the first scheme (for the contribution period in the Civil or Military Retirement Scheme) multiplied by the defined factor mentioned in Table (5) attached to the Law, the pension for the two periods, in this case, is calculated as follows:


a. A pension is calculated for the contribution period served under the Social Insurance Scheme, based on the contribution wage in the last two years determined according to the regulations of such a scheme. 
b.Another pension is calculated for the period served under the Civil or Military Retirement Scheme, based on the last wage in such a scheme, multiplied by the defined factor mentioned in Table (5) attached to the Law. 
The total pension will be the result of paragraphs (a) and (b) above, and paid to the contributor as one pension.


Example of calculating the pension if the last scheme is the Civil or Military Retirement Scheme
The contribution period in the Social Insurance Scheme is (5) years and the paid wage is S.R. 4,000. The contribution in the Civil or Military Retirement Scheme is (30) years and the last wage is S.R. 12,000. 
Retirement Pension: 12,000 × 35 ÷ 40 = S.R. 10,500.


Example of calculating the pension if the last scheme is the Social Insurance Scheme: 
1. The contribution period in the Civil or Military Retirement Scheme is (5) years and the last wage is S.R. 4,000. The contribution period in the Social Insurance Scheme is (30) years ended with the retirement of the contributor and his average wage in the last two years is S.R. 12,000. 
Since the last wage in the Civil or Military Retirement Scheme after multiplying it by the defined factor mentioned in Table (5) exceeds the average (4,000 × 3.24340 = S.R. 12,973.60), the pension will be entirely settled on the basis of the last two-year average. 
Retirement Pension: (12,000 ×) 35 ÷ 40 = S.R. 10,500. 

2. The contribution period in the Civil or Military Retirement Scheme is (5) years and the last wage is S.R. 12,000. The contribution period in the Social Insurance Scheme is (30) years ended with the retirement of the contributor and his average wage is S.R. 12,000. 
Since the last wage in the Civil or Military Retirement Scheme after multiplying it by the defined factor mentioned in Table (5) is less that the average (2,000 × 3.24340 = S.R. 6,486.80), the pension will be settled as follows: 
The pension for the period of contribution under the Civil or Military Retirement Scheme: (2,000 × 3.24340 × 5) ÷ 40 = S.R. 810.85.


The pension for the period of contribution under the Social Insurance Scheme: (12,000 × 30) ÷ 40 = S.R. 9,000.
The total pension: 810.85 + 9,000 = S.R. 9,810.85.