Saudi pension fund may see asset erosion, warns Shura member

Saudi Arabia’s Public Pension Agency (PPA) may suffer an asset erosion in 16 years and will unlikely be able to pay pensions over the coming years, Al Hayat newspaper has reported, citing a Shura council member.

The new pension subscriptions which reached SAR 14.2 billion failed to cover the pensioners’ payments amounting to SAR 25 billion, Said A. Al-Sheikh, a member at the Shura Council's Committee of Economy and Energy said.

This means that the PPA liquidated assets to offset the deficit and pay the retirement pensions, which will likely weigh on the investment assets’ value. Also, in such case, no new pension subscriptions will be added to the investment portfolio, and this will reflect negatively on the money market, and will represent new financial burdens for the Kingdom, he 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.