RIYADH: 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.
The world’s largest asset manager said expanding funded retirement schemes could help channel household savings into productive investments while improving retirement outcomes, supporting the Kingdom’s broader Vision 2030 agenda.
The 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.
These developments underscore Saudi Arabia’s commitment to building a more robust framework for individual security while powering the nation’s long-term economic objectives.
Kashif Riaz, head of BlackRock Riyadh Investment Management and Middle East Financial Advisory, said: “Developing robust retirement systems is not just a social imperative, it is a capital markets opportunity.”
He added: “By 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’s broader economic diversification agenda.”
According to the report, funded defined-contribution plans, including voluntary workplace savings schemes, present a “dual opportunity” by improving retirement outcomes while directing domestic savings into long-term investments that support capital-market development.
The 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.
Saudi Arabia’s 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.
“A stronger retirement system can become one of the most important domestic capital engines for Vision 2030,” said Tony Hallside, CEO of STP Partners.
He added: “Saudi Arabia has already built momentum in capital markets, but the next stage requires deeper, more consistent pools of long-term local capital.”
Expanding access to funded savings
A 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.
The firm said this allocation limits both individual wealth creation and the flow of capital into productive long-term investments.
“Expanding access to structured, funded retirement solutions could mobilize domestic savings into long-term investment pools; support deeper, more liquid capital markets; and enable residents’ wealth to grow alongside the Saudi Arabian economy,” said BlackRock.
While 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.
“Funded 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,” said Hallside.
He explained that it supports individual retirement security while also providing companies, projects, and government-linked initiatives with a more stable funding base.
“The 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,” the STP Partners CEO added.
Strengthening retirement preparedness
The report said workplace and individual retirement savings plans should complement, rather than replace, Saudi Arabia’s public pension system.
More 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.
Retirement 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.
“Rather than replacing public pensions, enhanced retirement systems form a critical second pillar — strengthening financial resilience across both Nationals and expatriates, while supporting Saudi Arabia’s broader economic transformation goals,” said the report.
Although 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.
The 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.
Workers 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.
Key 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.
Reliance 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.
Some 95 percent of Saudi nationals said they find defined-contribution schemes appealing, and 91 percent said they would consider participating.
The 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.
“Our 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,” added BlackRock.
Hallside 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.
“Auto-enrolment with the ability to opt out would also lift participation without forcing behavior. For nationals, these schemes can complement the public pension system,” said Hallside.
He added: “For 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.”
