Saudi Pension Agency cautious investing helped keep savings intact

Saudi Arabia’s Public Pension Agency (PPA) has kept its savings intact against potential risks and economic fluctuations, thanks to its cautious and strong investment policies, which are regularly reviewed, the state-run Saudi Press Agency (SPA) reported citing a fund statement.

PPA is keen to boost cushion itself against local or global economic changes by adopting the best investment strategies and resilient policies.

Every three years, the pension agency hires international advisers to develop a new study and reallocate its strategic assets in light of changes to capital market conditions and pension liabilities.

The study is reviewed by the PPA’s investment committee, the statement added.

Meanwhile, the pension fund added that it faced several challenges due to demographic and economic changes, as well as the adjustment of the benefit system, which weighed negatively on its financial resources.

The number of beneficiaries and pensions doubled over the last decade from 370,000 persons with total pensions of SAR 25 billion in 2007 to 770,000 with SAR 66 billion pensions by the end of 2016.

Salaries of the fund beneficiaries increased seven times between 1975 and 2008.

However, pensions in Saudi Arabia are calculated on the latest monthly basic salary, while in other countries, pensions are based on the average salary of the service years, or the average of the last five or two years.

The regular pension age in the Kingdom stands at 58 years, compared to 62-67 years worldwide, the PPA added.

The PPA’s return on investment (ROI) reached 1.9 percent, compared to 6.4 percent in Australia and 5.1 percent in Canada, Argaam earlier reported.