Pension Rights Between Ukraine and Saudi Arabia
As a result of globalisation, moving to another country has become increasingly common. People relocate for many reasons, including employment, better living conditions, family circumstances and other personal considerations. In this article, we consider what happens to pension rights and pension payments when a Ukrainian citizen works or resides in Saudi Arabia.
Recognition of employment and insurance periods accumulated in Saudi Arabia for Ukrainian pension purposes depends on the international social security framework applicable between the two countries. In the absence of an agreement providing for the aggregation or mutual recognition of insurance periods, employment in Saudi Arabia is not automatically included in the insurance record required for a Ukrainian pension. Likewise, Ukrainian insurance periods are not automatically recognised for Saudi pension purposes solely on the basis of Ukrainian legislation.
If a person has already been granted a Ukrainian pension and subsequently moves to Saudi Arabia, a separate question arises as to whether residence abroad affects the right to continue receiving that pension and how the pension income is taxed.
Ukraine and the Kingdom of Saudi Arabia have concluded an international agreement for the avoidance of double taxation. The applicable provisions determine which state has the right to tax pensions and other similar payments, depending on the nature and source of the income and the recipient’s tax status.
Separate rules may apply to remuneration and pensions connected with government service. Depending on the circumstances, such payments may be taxable in the state in connection with whose government service they are made or in the other contracting state, taking into account factors including the recipient’s residence and nationality.
The payment of an already granted Ukrainian pension to a person residing abroad is a separate legal issue. In its Decision No. 25-rp/2009 of 7 October 2009, the Constitutional Court of Ukraine considered provisions that made pension payments to persons permanently residing abroad dependent on the existence of an international pension agreement between Ukraine and the relevant country.
The Constitutional Court declared such restrictions unconstitutional. Accordingly, the exercise of an acquired pension right cannot be made conditional solely on whether Ukraine has concluded a pension agreement with the pensioner’s country of residence. Permanent residence in Saudi Arabia should therefore not, by itself, deprive a person of the right to receive an already granted Ukrainian pension.
It is important to distinguish between the recognition of Saudi insurance periods when determining entitlement to a Ukrainian pension, the taxation of pension income and the right to receive an already granted Ukrainian pension while residing in Saudi Arabia. These are separate legal matters and may be governed by different provisions of national and international law.
Ukrainians who have worked in Saudi Arabia should therefore retain documents confirming their employment, earnings and participation in the applicable Saudi social insurance or pension system. When applying for a pension or arranging pension payments abroad, the legislation and international arrangements applicable at that time should be examined to determine how the relevant foreign insurance periods affect the person’s pension rights.
