What Are The New Laws on Pensions in the UAE?

A new Federal Decree-Law has been announced by the General Pension and Social Security Authority (GPSSA) in the UAE, with the primary objective of enhancing the policies and operational framework of the authority.

The law introduces a unified pension calculation mechanism for both government and private sectors, based on the average contribution account salary of the last six years of the subscription period. Retirement pension eligibility is set at a minimum age of 55 with a minimum subscription period of 30 years.

The new law aims to ensure the efficiency and sustainability of pension financial resources, uphold future commitments, and bolster the flexibility of pension and social security services in the country. Additionally, it seeks to address any disparities in services and policies provided to UAE nationals in both the government and private sectors, fostering greater equality in insurance benefits.

Notably, the law provides flexibility and benefits for working mothers, allowing them to apply for a retirement pension entitlement at a younger age and a shorter subscription period. Working mothers are also permitted to maintain optional subscriptions during leave periods to care for their children.

Key provisions of the new law include a defined monthly contribution structure for insured individuals and contributions from insurers, employers, and the government.

Other provisions cover the purchase of nominal periods to be added to actual service periods, ensuring further equality between insurers from the government and private sectors. Retirees with a subscription period of 30 years can combine their pension with their salary, regardless of value.

A retiree who is receiving payment under Federal Law No. (7) of 1999 (as mentioned) or any other prior law will remain protected by the current law. Even if they started a new job after the new Federal Decree Law No. (57) of 2023 was issued, the insured person who received an end-of-service bonus by the terms of Federal Law No. 7 of 1999 or any prior law will still be covered by the current Federal Law No. (7) of 1999.
 

To encourage hiring UAE nationals in the private sector, the government bears (2.5%) of the employer's share for working Emirati nationals whose contribution account salary is less than (20,000) dirhams. The monthly contribution for the insured is defined as (26%) of their contribution account salary. The insurer bears (11%) of the insured's contribution account salary. The employer bears (15%) of the insured's contribution account salary.

This comprehensive update to pension regulations reflects a commitment to optimizing the pension system in the UAE, ensuring fairness, sustainability, and adaptability to the evolving needs of the workforce.