Dr Ibrahim Abdul Aziz Al Assaf Minister of Finance Saudi Arabia

City of dreams, made a 21st century reality
The Public Pension Agency of Saudi Arabia is an active participant in development projects across the Kingdom

The provision of pensions to retired government employees and their beneficiaries requires substantial financial resources and any organisation faced with such a task must be able to generate sufficient funds to fulfil these commitments. Saudi Arabia’s Public Pension Agency (PPA) has been operating since 1958, during which time it has paid out almost 195 billion Saudi Riyals (approximately £25 billion) and has benefited more than 1.1 million pensioners and dependents.

“The PPA is a government agency that provides social security to government employees, not a government-related financial institution. It is owned by retired civil and military government employees,” explains Mohammed A. Al-Kharashi, the agency’s governor. “At present, we have about 784,000 beneficiaries including wives and families of deceased pensioners.”

Payments are fully automated through the banking system, and the agency operates a computerised archiving system to expedite the processing of transactions. While a call centre handles telephone enquiries, improved access to the system has been provided with the creation last year of 46 branch offices across the Kingdom, fully equipped with the latest technology, particularly for the scanning of all types of documents.

In line with its stated objectives, the PPA is actively developing its financial resources through investment activities and projects. Given monthly expenditure of SAR1.9 billion (£251m), the agency needs to achieve annual returns of at least six or seven per cent. Diversification is the key, says Mr Al-Kharashi, in order to build up a set of strong assets which can guarantee valuable returns.

“The Board of Directors, which is chaired by Minister of Finance Dr Ibrahim Abdul Aziz Al Assaf, plays a supporting role in the implementation of creative projects that can add value and stabilize investments without focusing only on a certain category – either local equities or foreign equities,” states the PPA governor. “We want to diversify investments and end up with a set of strong assets to enable the PPA to get valuable returns. This will then help in enhancing the return of the assets.”

The King Abdullah Financial District - a place where companies meet to do business, where students come to learn and where the best technology will serve the brightest minds.

Among the several projects in hand are the development of a 2.7 million square metre site in Jeddah, set to become a housing or commercial area; the creation of a major mortgage financing firm for PPA shareholders; and an asset acquisition drive focusing on real estate.

However, the projects attracting the most media interest at present are the King Abdullah Financial District and the Technology and Information City (TIC). The first of these, a self-contained business and investment centre to be designed and built using the very latest technologies, will be home to the Kingdom’s major financial institutions and companies, as well as providing essential services such as telecommunications, data centres, hotels and housing.

The TIC, which will be totally financed by the PPA, will include research and development centres, small and medium-sized local and global enterprise buildings and production labs for the big ITC businesses.

“From the very beginning, we have opted for non-traditional and strategic projects,” says Mr Al-Kharashi. “We do not want to compete with the private sector, so we focus on mega projects that add value to the country and create an environment which is in line with the prestige of the Kingdom.”