Saudi Arabia increases retirement age to 65 years

Saudi Arabia has raised the retirement age to 65 for both public and private sector workers, up from 60, as part of its Vision 2030 reform plans.

The decision, approved by the Saudi Cabinet in the latest meeting chaired by Crown Prince Mohammed bin Salman, aims to ensure a sustainable lifestyle for citizens after retirement and improve the conditions of retirees.

Gradual Implementation

The new retirement age will be implemented gradually, with a four-month increase in retirement age for each month until the new age limit is reached.

This policy will apply to workers under 48 years and 6 months old when the decision is issued.

The retirement age of those individuals who are already 58 years and 4 months old at the time of this decision will not change.

Meanwhile, younger workers, specifically those under 29 years of age at the time of the policy implementation, will see their retirement age set at 65 years.

Termination/Resignation at Retirement Age

As a result, the employer cannot terminate an employee at 60 under Article 74 (4) of Saudi Labor Law. The employer will have to wait five more years now, as the retirement age has increased to 65.

As per Article 74 of Saudi Labor Law, an employee can resign, and the employer can terminate the contract at retirement age without any penalty. It means that;

• The employee will receive the full End of Service Benefits if he resigns at the retirement age in KSA.
• Similarly, the employer will not have to pay any additional benefit to the employee for termination at the retirement age.

If the employment contract goes beyond the retirement age, it can be terminated at the contract completion date.