I had two questions that someone may be able to help me with:
1. Is there any reason why one wouldn't want to sign-up to the FX protection scheme? It seems that with the exception of the need to deposit all your salary in KSA (i.e. without having the option to split payments to different accounts around the world), under the FX protection scheme you will never be worse-off (compared to not signing-up). Is this right or have I missed something?
2. Let's assume that one does indeed sign-up to the FX protection scheme. Does Aramco deposit all the money in KSA in SAR or can it be USD as well. And if it can be USD, what's the cheapest way for one to convert for his in-kingdom needs, USD to SAR?
I may have misunderstood it, but under the FX protection scheme it seems that ALL your money must be deposited in KSA. Is this right?
Assuming it is, then the question is whether this deposit must be made only in SAR, or you can ask Aramco to deposit some e.g. in Euros and USD (assuming you have such sub-accounts in your local bank).
The reason I ask this is that I presume Aramco - if the above is possible and a split payment is possible - will convert part of your SAR salary into EUR under a good rate, much better than the one provided by your local bank.
You are mistaken. As previously advised, global payroll will deposit whatever amount of your salary you authorise into your local Saudi bank account and the balance will be deposited into your home bank account. If you receive this as sterling, euros etc then the conversion of your dollar salary to the currency of your home bank is determined by SA exchange rate at the time of the transaction. The rate is cleary shown on your payslip every month. The protection mechanism you talk about, is unlike dollar payroll who have a fixed exchange rate against SAR (meaning their salary is the same every month), global payroll suffer from the prevailing exchange rate ( to the currency of your chosen "home" bank) every month. In order global payroll do not lose out due to exchange fluctuation the protection mechanism is in place but previous contributors have shed doubt on its effectiveness.
Welshman, apologies if it's clear to you but yet again I'm not sure I understand.
1. I was previously told that if one selects for the FX protection scheme, then all the money must be deposited in KSA. Is this wrong? Please note that I don't ask if under normal circumstances payments can be split; I know they can. My question is about what happens when one chooses the FX protection scheme.
2. I have studied the FX protection Scheme and it seems to me that it may prove ineffective but in no circumstance would one be worse off. Is my assessment correct?
3. Lastly, compared to the normal, bank exchange rate, the rate used by Aramco for the monthly conversion of USD to e.g. EUR, is it worse or better?
Hi Omega, Not really sure what you are saying. 1. On global payroll you do not opt in or out of the currency protection scheme, you are in it from the time you step on the plane to come here. Your protected rate is set then and stays at that rate for your entire Aramco career. If exchange rate of dollar (what you are paid in) drops by more than 5% Aramco pick up the difference (you have to take the first 5% hit). See pg 33 of the relocation and orientation guide you should have received, 2. As your career lifetime protected rate is set as soon as you step on the aircraft there maybe circumstances where you will benefit or lose out dependant on how long you remain in KSA and currency fluctuations of the dollar versus your home country currency, 3. From what I have seen Aramco rate looks slightly better but I don't really track it. At the end of the day you get what you get. You could get all of your salary paid into a local KSA bank and then disburse the money yourself if you have the inclination and want to track rates. Hope this helps
1. I need to ask for the relocation guide. I'm due to arrive in a week and I haven't received it (yet). 2. I was under the impression that the FX protection scheme is optional i.e. you can decide to take part or not.
On two points my info contradict yours; please allow me to share but again this is what was passed-on to me, I'm not super sure for the accuracy - I just share to get input:
a) the FX protected rate is not set for life but rather Aramco takes the three year rolling avee. For example since I arrive in 2015 they take the rate of 2012-2014. The first 5% is indeed my loss and after that the fixed rate kicks-in (unless the actual/current one is more favorable - see next point). For the salaries paid after January 2016, they will take the three-year rate of 2013-2015.
b) under the FX protection scheme one can never lose out. This is because Aramco always pay you under the protected rate or the actual/current rate, whichever is more favorable for you. This is why I was wondering if one has really anything to lose from taking part in the FX protection Scheme.
Thank you again Welshman for your input and apologies if I confused you with earlier postings.
Have you opened an account in CAD in KSA? Is it customary to open an account in the Kingdom in EUR (and generally in non-USD/SAR)? I'm asking because I'd like to keep the money in Euros within the Kingdom for a few months. Also, based on your experience is there any way that the FX Scheme could make you worse off? (I cant think of any but I'd appreciate your input).
As a general comment and FWIW and regarding the FX Protection Scheme, after speaking with the relocation advisor, he advised me that a) signing up to the Scheme is not optional and b) the locked rate is indeed the 3-year rolling avee, with the 5% 'discount' as previously discussed (and not the rate at the time of hiring).
I did open both CAD and USD accounts here, but don't use them much, unless I end up with a surplus of SAR and want to send money home.
If you do choose to get part of your payroll deposited In-Kingdom, note that for local deposits the only currency offered is SAR (if you want to get paid in EUR, you have to provide a foreign bank account).
So if you get a payroll deposit here, it will be in SAR. If you then want to switch it to EUR, without sending it outside KSA, you will have to transfer it from your local SAR to local EUR account manually. At that point you will likely take a bit of a hit on the exchange.
If your end goal is to end up with your money in EUR, you'd be better off sending your pay straight to your home bank in the EU, since you get a better exchange rate like I was mentioning. That said, you may have a reason to park your money here first, so it's up to you.
For the FX protection scheme, you can't really lose. If your home currency weakens against the US Dollar, then you enjoy the benefit of the exchange rate (33% for me this month). I actually cheer each time the Canadian dollar weakens, though I'd never admit that to my friends back home ("Another 3-cent drop? That's terrible. So sorry.")
If your currency goes the other way and gets stronger than the USD, then you're protected by the FX scheme. You really get to have your cake and eat it too.
Reviewing a post earlier in the thread by Atactic, I was wondering if someone had an update about the actual conversion rate from SAR to USD for let's say a premier/elite member in a Saudi bank. Is it 3.75? Or do the banks ask for a premium, even for elite/premier members?
Lastly, when in global payroll with home currency being EUR, is it possible to ask Aramco to split the payment in SAR (deposited in local bank) and send the balance to a USD denominated account abroad? The key difference is that the balance of the money would not be sent abroad in EUR (which is the home currency and the currency protected by the FX Scheme) but rather in USD.
If you are on Global Payroll you can ask Aramco to deposit some of your money in a local Saudi Bank and the balance to be paid in any international currency. However, you must have an account in that currency. Therefore, if you are in the Euro zone but wants the balance of your money in USD you must have a USD denominated account.
You can either ask for a fixed amount or percentage to be paid into your USD denominated account and the balance in Saudi currency.
Regarding your post, If your currency goes the other way and gets stronger than the USD, then you are protected by the FX scheme. You really get to have your cake and eat it too., bear in mind that if your currency gets stronger than the dollar you will be exposed to some losses.
Lets say that the currency protection rate for the EURO to the $$$ is 1.37 USD to 1 Euro. If the Euro strengthens against the dollar, you'd bear the loss for any drop in the rate until the drop gets to 1.55 USD to the Euro which is when the 5% protection kicks in.
However, you also stand to gain if the $$$ becomes stronger than the Euro.