Published On: February 1st, 2024 / Last Updated: January 31st, 2024 / 2.6 min read /

New UAE Pension Law

On 2 October 2023 UAE Federal Decree Law No. 57 of 2023 (the “2023 Pensions Law”) came into effect. The 2023 Pensions Law is the most significant change to the pensions landscape since the UAE Federal Law No. 7 of 1999 as amended (the “1999 Pensions Law”)

The General Pension and Social Security Authority (GPSSA) recently introduced a significant change in the pension and Social Security in order to promote more Emiratis entering the UAE workforce. It also aims to enhance the flexibility of the pension and social security services in the UAE, and to mitigate any gaps in services and policies provided to the UAE nationals working in the government and the private sectors.

Under the new rate, the Emirati employee will contribute 11% of the amount while the employer pays the rest of the 15 per cent. But for the Emiratis working in the private sector whose contribution account salaries are less than Dh20,000, a rate of 2.5 per cent is paid by the UAE government as a form of support and encouragement to hire Emiratis in the private sector.

Who all are Eligible?

Applies to Emiratis hired from 31 October 2023 onwards. And doesn’t apply for Emiratis hired pre-31 October 2023 remains under Federal Law 7/1999. Emiratis working in government and private sectors are eligible for pensions and other retirement benefits after reaching the retirement age of 49 or after having served a minimum of 20 years, according to the UAE government.

Pension Contribution:

By GPSSA the pension contribution should be made every month and calculated about the employee’s full salary inclusive of any incentives like bonuses or any commissions.

Employer: 15% (of which 2.5% will be paid by the Government where an employee earns less than AED 20,000 in the private sector)

Employee: 11%

Changes in monthly Contributions:

Old Pension Law (Before 31-Oct-2023New Pension Law (After 31-Oct-2023
Employee5% of salary11% of salary
Employer15% of salary. (with 2.5% subsidized by government)15% of salary, (2.5% subsidized by the government for Emiratis earning under AED 20,000.)

The total new contribution therefore is 26% where the monthly salary is AED 20,000 or more and 23.5% in case the salary is lower, the 2.5% difference will be borne by the Government. For insured citizens working in the private sector, the government pays 2.5 percent on behalf of the employer, if they receive pensionable salaries less than AED 20,000. This initiative by the government is aimed at promoting the employment of UAE citizens in the private sector.

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