Published On: July 20th, 2022 / Last Updated: July 18th, 2022 / 4.2 min read /

Understanding Pension Contribution for UAE and GCC Nationals

Pension is provided to eligible Emiratis and other GCC nationals working in the UAE. General Pension and Social Security Authority (GPSSA) is entrusted with providing pension-related services to citizens employed in the federal government entities and the private sector across all the emirates. Managing the payroll is a bit difficult without the help of a payroll service company or without using an HRMS software like HR Chronicle.

Let’s take a quick of how the pension is managed in the UAE and the rules

Terms for Contribution:

  • The employer must register and contribute on behalf of the employee within 30 days of the employee joining the entity.
  • Should not be less than 18 years; nor should he/she be more than 60 years
  • Must be medically fit upon appointment according to a medical report provided by a medical authority and approved by GPSSA.

Eligibility for pension:

  • The pension scheme by GPSSA covers aging, disability, death, work and occupational illnesses. Additionally, as per Article 16 of the federal pension law, an employee is entitled to a pension if:
    • completes 20 years of service and
    • is at least 50 years of age.

Contribution Rules for UAE Employees:

A contribution equal to 20 (%) percent of the employee’s salary must be made to GPSSA monthly basis.

  • Governmental Sector Employees
    While the employee must contribute 5 (%) percent of his/her salary.
    The employer must contribute 15 (%) percent of the employee’s salary.
  • Private Sector Employees
    While the employee must contribute 5 (%) percent of his/her salary,
    The employer must contribute 12.5 (%) percent of the employee’s salary.
    The Government must contribute (2.5%) percent of the employee’s salary.

Pension for GCC Nationals:

A GCC citizen (nationals of Saudi Arabia, the United Arab Emirates, the Kingdom of Bahrain, the Sultanate of Oman, the State of Qatar and the State of Kuwait) who works in another GCC country has the right to enjoy a pension in the same ways as he/she would enjoy if working in his/her own home country. He/she is eligible to receive a pension as per the respective law of his/her country.

Contribution for nationals of the Kingdom of Saudi Arabia:

The contribution is fixed at 18% percent of the salary.

While the employee must contribute 9 (%) percent of his/her salary,
The employer must contribute 9 (%) percent of the employee’s salary.

Contribution for nationals of Oman:

A 17.5% social security contribution is applicable to employees who are Omani nationals,

While the employee must contribute 7 (%) percent of his/her salary,
The employer must contribute 10.5 (%) percent of the employee’s salary.

Contribution for nationals of Qatar:

The employee must pay in a monthly contribution equivalent to 5% of salary, the employer tops the contribution up by a further 10% (gross salary), and the government also contributes, covers administration and makes up any shortfalls to ensure the total contribution of 15%.

Contribution for nationals of Kuwait:

For Kuwaiti employees, contributions are payable monthly by both the employer and employee under the Social Security Law. The employer’s contribution is 11.5% and the employees are 8% of the monthly salary.

Contribution for nationals of Bahrain:

The Social Insurance Organization (SIO) of the Kingdom of Bahrain has raised contribution rates due from insured individuals employed in the government and private sectors, including Bahrainis working in any of the Gulf Cooperation Council (GCC) countries.

The total increase, which includes a combined share from the insured individual and the employer, has become 24%.

The recent amendments to the laws regulating retirement pension and benefits in the Kingdom of Bahrain entail an increase in the contribution of the employer in the government sector by 2% of the employee’s salary, bringing the total percentage after the increase to 17% as of May 2022, while the contribution of the Bahraini employee (insured or contributor) has increased by 1%, bringing the total contribution rate to 7%, starting by January 2023.

In the private sector, the percentage of the employer in the pension contribution has increased by 2% of Bahraini employees’ wages as of May 2022, and to be increased by 1% at the beginning of each year from January 2023 until January 2028, bringing the total percentage of the employer’s share to 17%.

The share of the Bahraini employee in the private sector has increased by 1%, which means the total contribution rate will reach 7% by January 2023.

If you want to align your HR and Payroll Management process, contact HR Chronicle – The Leading HR and Payroll Management Solution in the Middle East Region. With unlimited remote support and a user-friendly interface option along with Mobile App; HR Chronicle is the one-stop solution for all your HR and Payroll needs. HR Chronicle is the Leading HR and Payroll Management software in the UAE Region. HR Chronicle is fully compliant with GCC country rules out of the box.

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