Saudi Arabia is combining its general insurance and public pension funds to create a public sector entity with $29 billion in domestic and foreign stock holdings.

The kingdom’s cabinet has agreed on the merger of Saudi Arabia’s General Organization for Social Insurance (Gosi) and the Public Pension Agency, according to the Saudi Press Agency.

The combination of the two state-run funds is an extension of “continuous reforms” and part of an organizational restructuring process, in line with the kingdom’s Vision 2030 objectives, minister of finance Mohammed Al Jadaan, who is also chairman of Gosi’s board, said in a statement on Thursday.

The move underscores the importance of the social insurance sector “as [a] symbiotic system which has an essential role in improving social protection for all citizens”, the minister said.

The merger will bring social benefits coverage for public and private sector employees under one insurance scheme and will help to eliminate duplication of processes. It will also increase “operational and financial efficiency” and improve services, he added.

“The merging process will strengthen the fund’s financial position by maximizing investment returns and will improve investment performance and strategic diversification” of its portfolio of investments, Mr Al-Jadaan said.

The funds hold significant stakes in Saudi Arabian companies, including a combined $8.5 billion holding in Saudi National Bank, the kingdom’s largest bank by assets. It also controls, a $4.3 billion stake in Al Rajhi Bank, according to data compiled by Bloomberg. The public entities, whose portfolios also include real estate and domestic and foreign bonds holdings, also hold shares worth $207 million in drug maker AstraZeneca and $170m in HSBC.

It merged eight public development institutions focused on agriculture, human development, industrial development and real estate, among others, to create the National Development Fund in 2017, to reduce the cost and speed development of public sector projects, including mega infrastructure schemes.