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Riding the Wave of Reform
Last year, we introduced you to a new chapter in Saudi Arabia’s social insurance reform — a bold initiative by GOSI to unify pension systems and gradually raise retirement age and contribution rates. At the time, we were still shaping our response. But today, the solution is no longer on the horizon — it’s live.
This blog highlights what has changed since our first post Understanding the New Social Insurance System what SAP has delivered, and what’s next on the compliance roadmap.
What Changed Since Our Last Blog?
In our earlier blog, we introduced the law’s intent and outlined three employee groups based on age and GOSI contribution history. Back then, the solution was still in discussion.
Since then, several assumptions have been simplified:
- No new fields are needed for first contribution tracking.
- No contribution proration is required between July 1–2 and July 3 — the effective date for the new SI group (SN) was adjusted to July 1st.
- A combination of popup messages and business rules now guides users in assigning the correct SI Group — without requiring external GOSI data.
What Has SAP Delivered?
1. Effective Date Adjustment
To ensure calculation consistency, the effective date for the SN contribution percentage is now July 1st (2025–2028), avoiding monthly proration.
2. SI Group Assignment Logic (SAP Payroll)
Infotype 3252 now defaults the SI Group based on the employee’s Hijri date of birth and whether they contributed to GOSI before July 3, 2024.
If the employee is under 50 Hijri, a popup prompts the user: i.e. SU is selected if the answer is Yes while SN is selected if No
On HR Renewal mashup screens, a warning message appears instead of the popup.
3. EC and ECP Handling (Business Rule)
For customers using Employee Central or Employee Central Payroll, a Business Rule in Global Info raises a warning when the SI Group is entered manually. This ensures users follow the same classification logic applied in SAP Payroll.
4. SANED Retirement Handling – With Flexibility
SAP now supports automatically stopping SANED contributions once the employee reaches retirement age. This reflects real-life cases where the employee continues working — often due to expertise or business needs.
In such scenarios, the employer may choose to continue the GOSI annuity contribution (basic fund) by checking the “No Age Check” flag in Infotype 3252. The system continues the annuity and excludes SANED automatically, maintaining compliance without manual steps.
What’s on the Horizon?
As a continuation of GOSI modernization, a new business-to-authority API is now available from GOSI to provide the contribution percentage per employee. This may eliminate the need for maintaining contribution parameters manually.
SAP is currently evaluating this integration offering for potential inclusion in future releases.
| Please refer to the SAP disclaimer regarding forward-looking features.
In parallel, we’re also preparing a new blog covering the recent updates to the Saudi Labor Law Executive Regulations. This will showcase recommended solution designs (not standard delivery) to help manage new legal expectations around employee sanctions, probation, notice periods, and leave policies using extensibility tools like MDF and business rules. Stay tuned!
Want the Technical Details?
We’ve documented the full solution — including SAP Notes, system behavior, and rule logic — in this KBA:
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