\n\tRIYADH: Saudi Arabia has an opportunity to turn retirement savings into a new source of long-term capital that could deepen financial markets and support economic diversification, according to a report by BlackRock.\u00a0<\/p>\n
\n\tThe world\u2019s largest asset manager said expanding funded retirement schemes could help channel household savings into productive investments while improving retirement outcomes, supporting the Kingdom\u2019s broader Vision 2030 agenda.<\/p>\n
\n\tThe findings come as Saudi Arabia pushes ahead with pension reforms aimed at strengthening the long-term sustainability of its retirement system. In 2024, the Kingdom approved changes that gradually raise the retirement age to 65 and increase the minimum contribution period required for early retirement.\u00a0<\/p>\n
\n\tThese developments underscore Saudi Arabia\u2019s commitment to building a more robust framework for individual security while powering the nation\u2019s long-term economic objectives.\u00a0<\/p>\n
\n\tKashif Riaz, head of BlackRock Riyadh Investment Management and Middle East Financial Advisory, said: \u201cDeveloping robust retirement systems is not just a social imperative, it is a capital markets opportunity.\u201d\u00a0<\/p>\n
\n\tHe added: \u201cBy moving toward funded, long-term savings frameworks, Saudi Arabia can mobilize domestic capital at scale thereby channelling household savings into productive investment, deepening local markets, and supporting the Kingdom\u2019s broader economic diversification agenda.\u201d\u00a0<\/p>\n
\n\tAccording to the report, funded defined-contribution plans, including voluntary workplace savings schemes, present a \u201cdual opportunity\u201d by improving retirement outcomes while directing domestic savings into long-term investments that support capital-market development.\u00a0<\/p>\n
\n\tThe report said such frameworks could create long-term pools of domestic capital, boost investor participation and strengthen financial markets in line with Vision 2030 objectives.\u00a0<\/p>\n
\n\tSaudi Arabia\u2019s retirement system combines an earnings-based pension with a lump-sum award, while individuals who do not qualify for monthly pension payments receive only the one-time benefit.\u00a0<\/p>\n
\n\t\u201cA stronger retirement system can become one of the most important domestic capital engines for Vision 2030,\u201d said Tony Hallside, CEO of STP Partners.\u00a0<\/p>\n
\n\tHe added: \u201cSaudi Arabia has already built momentum in capital markets, but the next stage requires deeper, more consistent pools of long-term local capital.\u201d\u00a0<\/p>\n
\n\tExpanding access to funded savings\u00a0<\/p>\n
\n\tA large share of household wealth in Saudi Arabia remains concentrated in traditional assets, with cash accounting for 49 percent of holdings, gold 40 percent and property 18 percent, according to BlackRock.\u00a0<\/p>\n
\n\tThe firm said this allocation limits both individual wealth creation and the flow of capital into productive long-term investments.\u00a0<\/p>\n
\n\t\u201cExpanding access to structured, funded retirement solutions could mobilize domestic savings into long-term investment pools; support deeper, more liquid capital markets; and enable residents\u2019 wealth to grow alongside the Saudi Arabian economy,\u201d said BlackRock.\u00a0<\/p>\n
\n\tWhile workers in Saudi Arabia generally feel confident about their current financial position, the report found a gap in long-term retirement preparedness, particularly among expatriates.\u00a0<\/p>\n
\n\t\u201cFunded retirement savings can help shift household wealth from passive stores of value into productive assets such as listed equities, sukuk, private funds and infrastructure-linked investments,\u201d said Hallside.\u00a0<\/p>\n
\n\tHe explained that it supports individual retirement security while also providing companies, projects, and government-linked initiatives with a more stable funding base.\u00a0<\/p>\n
\n\t\u201cThe real value is the time horizon: retirement capital is patient, institutional and less reactive to short-term volatility. That makes it a natural partner for economic diversification,\u201d the STP Partners CEO\u00a0added.\u00a0<\/p>\n
\n\tStrengthening retirement preparedness\u00a0<\/p>\n
\n\tThe report said workplace and individual retirement savings plans should complement, rather than replace, Saudi Arabia\u2019s public pension system.\u00a0<\/p>\n
\n\tMore than a third of Saudi nationals, or 36 percent, expect to rely on public pensions in retirement. By contrast, only 6 percent of respondents expect employer-sponsored retirement schemes to be a primary source of income in retirement, highlighting the need for broader access to funded savings options.\u00a0<\/p>\n
\n\tRetirement preparedness also differs sharply between nationals and expatriates. While 59 percent of Saudi nationals said they feel prepared for retirement, the figure falls to 41 percent among expatriates, many of whom rely on personal savings or less structured arrangements.\u00a0<\/p>\n
\n\t\u201cRather than replacing public pensions, enhanced retirement systems form a critical second pillar \u2014 strengthening financial resilience across both Nationals and expatriates, while supporting Saudi Arabia\u2019s broader economic transformation goals,\u201d said the report.\u00a0<\/p>\n
\n\tAlthough 75 percent of respondents have started saving or planning for retirement, only 57 percent save or invest regularly, and just 24 percent contribute to pension or long-term savings plans.\u00a0<\/p>\n
\n\tThe report also found that 42 percent of respondents are concerned about inadequate emergency savings, while only 19 percent rank retirement among their top three financial priorities. Among expatriates, retirement saving ranks as the top financial priority for 30 percent of respondents.\u00a0<\/p>\n
\n\tWorkers show a willingness to save but need greater access, clarity and guidance. Only 21 percent of Saudi nationals said they are confident in understanding their retirement savings options.\u00a0<\/p>\n
\n\tKey barriers include a lack of access to unbiased information, cited by 36 percent of respondents, while 32 percent said they were uncertain about how much to save and 26 percent were unaware of the options available to them. Demand for support remains high, with 92 percent saying they would save more if offered better incentives.\u00a0<\/p>\n
\n\tReliance on personal savings dominates retirement expectations, with 50 percent anticipating they will fund their retirement through personal savings, while only 6 percent expect to rely on employer-sponsored schemes.\u00a0<\/p>\n
\n\tSome 95 percent of Saudi nationals said they find defined-contribution schemes appealing, and 91 percent said they would consider participating.\u00a0<\/p>\n
\n\tThe presence of such schemes markedly boosts preparedness, with nationals reporting 78 percent readiness when enrolled versus 58 percent without, and expatriates showing an even larger jump from 39 percent to 82 percent.\u00a0<\/p>\n
\n\t\u201cOur findings highlight the important role that governments, employers, and those of us in the retirement solutions industry can play in working together to deliver better outcomes for individuals across both markets who need greater support and more effective solutions to prepare for later life,\u201d added BlackRock.\u00a0<\/p>\n
\n\tHallside said voluntary defined-contribution schemes could gain traction if supported by employer matching contributions, payroll deductions, low-cost default funds and clear portability rules, particularly for expatriates.\u00a0<\/p>\n
\n\t\u201cAuto-enrolment with the ability to opt out would also lift participation without forcing behavior. For nationals, these schemes can complement the public pension system,\u201d said Hallside.\u00a0<\/p>\n
\n\tHe added: \u201cFor expatriates, they can help close a major planning gap. Incentives matter, but simplicity matters just as much. If workers can see regular contributions, transparent performance and a clear retirement target, participation will rise quickly.\u201d\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"RIYADH: Saudi Arabia has an opportunity to turn retirement savings into a new source of long-term capital that…\n","protected":false},"author":2,"featured_media":647047,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4174,4175,56,54,55],"class_list":["post-647046","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-personal-finance","tag-personalfinance","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/647046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=647046"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/647046\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/647047"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=647046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=647046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=647046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}