Most guidance on Saudi payroll gives you a single percentage. That was reasonable advice until July 2024. It is now wrong often enough to be dangerous, because the Kingdom runs two social insurance systems at the same time, and which one an employee sits in depends on a date rather than a job title.
Two Saudi nationals in identical roles, one who first entered the workforce before July 2024 and one after, are governed by different rules on retirement age, pension entitlement and early retirement. Payroll has to know which of them is which. Separately, the contribution rates themselves have risen every July since 2025 and are scheduled to keep rising until 2028.
This guide sets out how the contributions are actually built, what changed, and how Saudization counts the people you are paying.
The split that governs everything
The new Social Insurance Law came into effect on 3 July 2024.
- The new system applies to Saudi nationals entering the workforce for the first time after that date.
- The previous system continues for Saudi nationals who had already contributed to the civil pension or social insurance systems before that date.
Two further groups stay under the previous system even though they were still working on that date. As at 3 July 2024, a national remains under the old rules if they were aged 50 Hijri years or above, which is approximately 48.5 Gregorian years, or had 20 or more years of contributions. Transitional arrangements apply to those below that age with fewer than 20 contribution years.
The practical consequence is that your payroll needs a field it may not have. Not nationality, not grade, but which social insurance system this specific person falls under, derived from their contribution history rather than from their contract with you. A new joiner who worked in the Kingdom before July 2024 does not carry the new system with them simply because they are new to you.
How the contribution is actually built
There is no single GOSI percentage. There are branches, and they apply to different populations.
| Branch | Employer | Employee | Applies to |
|---|---|---|---|
| Pensions | 10% | 10% | Saudi nationals |
| SANED (unemployment) | 0.75% | 0.75% | Saudi nationals only |
| Occupational Hazards | 2% | none | Saudi and non-Saudi |
The pension figures above are the rates applying from July 2026. They are not static, and the next section sets out where they are going.
Read down the right-hand column and the structure becomes clear. For a Saudi national, all three branches apply. For most expatriate staff, the Occupational Hazards branch at 2% payable by the employer is the entire GOSI cost, because expatriates are not covered by the pension or unemployment branches.
The word doing the work in that sentence is “most”. There is a category of employee who is neither a Saudi national nor an ordinary expatriate, and if you run a Bahrain business with a Saudi entity it is probably sitting in your payroll right now. The next section deals with it.
GCC nationals are not ordinary expatriates
This is the case most general guidance on Saudi payroll skips, and it is the case a Bahraini-owned group is most likely to have.
Under a decision of the GCC Supreme Council, the Unified Law of Insurance Protection Extension to GCC Member States Citizens Working in another GCC Member State was approved in Saudi Arabia by Royal Decree No. M/63, dated 26/11/1426H, and has applied since 1 January 2006.
The effect is that a GCC national working in another member state stays inside their home country’s social insurance scheme rather than being treated as a foreign worker in the host state. A Bahraini employee on your Saudi payroll therefore continues to accrue under the Bahraini scheme, and enjoys the benefits of the annuities branch as they would at home. The contribution follows the home country’s rules, and the Saudi employer is the one who has to administer it.
Two practical consequences:
- Do not budget a Bahraini employee in Saudi Arabia at the 2% expatriate rate. They are not an expatriate for these purposes.
- Do not budget them at the Saudi national rate either. Their contributions follow Bahrain’s scheme, not the rates set out above.
GOSI publishes separate guidance for each nationality, including a dedicated guide for Bahraini workers covering scope, excepted categories, insurance branches, registration, contribution rate and contributory wage. If you employ GCC nationals in the Kingdom, that nationality-specific guide is the document to work from rather than the general rates, and it is worth confirming the current figures directly because they are set by the home state.
The maximum contributory wage is SAR 45,000. Where a contributor works for more than one employer, the contribution is calculated on total wages from all of them, still subject to that ceiling.
The part that changes every July
This is the piece worth putting in your budget model rather than your compliance file.
The pension branch is rising. Employee and employer contributions each move up by 0.5 percentage points annually from July 2025, climbing from 9% each until each side reaches 11% in 2028.
Because both sides rise together, the combined pension cost increases by a full percentage point a year:
| From | Employee | Employer | Combined pension |
|---|---|---|---|
| Before July 2025 | 9% | 9% | 18% |
| July 2025 | 9.5% | 9.5% | 19% |
| July 2026 (current) | 10% | 10% | 20% |
| 2028 (end state) | 11% | 11% | 22% |
Add the other branches to a Saudi national’s line and, at the rates applying from July 2026, the combined employer and employee cost is about 23.5% of contributory wage: 20% pensions, 1.5% SANED, and 2% occupational hazards. Before the escalation started it was around 21.5%. It continues to step up by roughly a percentage point each July until 2028.
Two things follow. First, a Saudi salary costs more every July, so a headcount plan built on today’s rates understates the later years. Second, the increase falls on the employee as well, which means take-home pay reduces annually unless something is done about it. That is a retention conversation, and it is better to have it before the payslip has it for you.
The retirement changes behind the rate rise
The contribution increases are not arbitrary. They accompany a broader reform.
For those entering the workforce under the new system, the retirement age is 65 Gregorian years, raised from 58. Workers in the transitional group sit somewhere between 58 and 65, scaled according to their age as at 3 July 2024.
Early retirement also tightened. It now requires a minimum age of 55 with 30 years of contributions, where previously it was available at any age with sufficient contributions.
This matters for anyone modelling long-service costs, and it interacts with end of service provisioning in a way that is worth looking at deliberately rather than discovering later.
How Saudization counts the people you pay
Nitaqat measures the proportion of your workforce that is Saudi. The mechanism is the part worth understanding: it does not simply count heads. It weights them by salary.
A Saudi employee earning SAR 4,000 or more counts as one full worker toward your Saudization percentage. Between SAR 3,000 and SAR 4,000 the employee counts at a partial weight, roughly half. Below SAR 3,000, the weight is very low or the employee does not count at all.
This threshold is not a recent change, and it is worth correcting the record because a good deal of current commentary presents it as one. The Minister of Human Resources issued the decision raising the Nitaqat minimum to SAR 4,000 in November 2020, and it took legal effect on 18 April 2021.
The consequence is that your Saudization ratio is a payroll output, not an HR one. Two companies with identical headcount and identical Saudi-to-expatriate ratios can sit in different Nitaqat bands purely because of where their Saudi salaries fall relative to SAR 4,000. And because Nitaqat status governs your ability to obtain and renew work permits, a salary structuring decision quietly becomes a hiring capacity decision.
Saudization targets are revised periodically, and the occupations within scope expand over time. Rather than repeat a figure that may already have moved, confirm your own sector’s current target directly rather than working from last year’s number.
Where the numbers come from matters
One caution, because it applies to this topic more than most.
A large amount of published material on Saudi payroll quotes a single blended percentage, or presents the SAR 4,000 Nitaqat floor as a 2026 development, or states composite old-system and new-system totals that do not reconcile against the underlying branch rates. Some of it is simply out of date, and some of it never tied back to source.
The figures above are built from the branch rates and ceilings published by the General Organization for Social Insurance and from the structure of the Social Insurance Law reform. Where sources conflicted, we left the claim out rather than pick the more quotable version.
One such gap is worth naming, because it affects the arithmetic. Published commentary does not consistently agree on whether Saudi nationals who were contributing before 3 July 2024 follow the same annual escalation path as those under the new system, or remain on the earlier rate. We have not asserted either version here. If you employ Saudi nationals on both sides of that date, it is worth confirming the position for each of them rather than applying one blended rate across the payroll.
What to do about it
- Tag every Saudi employee with the system they fall under, based on contribution history rather than joining date with you. If your payroll cannot express that, it cannot calculate correctly.
- Separate your GCC nationals from your other foreign staff and check each against their home state’s scheme rather than the 2% expatriate rate.
- Model the July escalation to 2028 in your headcount plan, on both the employer cost and the employee deduction.
- Check your Saudi salaries against the SAR 4,000 line and understand what your Nitaqat weighting actually is, not what your headcount suggests.
- Confirm your sector’s current Saudization rate rather than relying on a prior year.
- Reconcile GOSI registrations against payroll so the contributory wage, including the treatment of housing, is consistent with what you are filing.
We handle payroll and compliance for businesses operating in Saudi Arabia, often for groups run from Bahrain that need both jurisdictions handled by one team rather than a provider in each. Where the annual filing is the pressure point, the related obligations are covered in our guide to zakat and corporate income tax in Saudi Arabia, and the audited statements behind it in audit support in Saudi Arabia.
This article is general information based on the General Organization for Social Insurance published contribution rates, the Social Insurance Law reform effective 3 July 2024, and ministerial decisions on the Nitaqat minimum wage, as at August 2026. It is not legal, tax or professional advice. Rates, thresholds and Saudization targets change, and the correct treatment depends on each employee’s circumstances. Confirm your position with GOSI or the Ministry of Human Resources and Social Development before acting.