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The monthly pension contributions for Emirati employees who have joined the workforce from October 31, 2023, have increased by 6 per cent as per the Law No. 57 of 2023. The total contribution salary is now 26 per cent.
Under the new rate, the Emirati employee will contribute 11 per cent 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.
Earlier, private sector employees contributed 5 per cent to their monthly contribution salary while employers contributed 12.5 per cent, while the remaining 2.5 per cent was paid by the government.
This was revealed during an awareness session which was attended by officials from more than 120 public and private entities.
A new circular was sent in November to all public and private sector entities, giving guidelines on ways by which contribution payments are transferred on behalf of Emiratis joining work for the first time as of October 31, 2023, and those who were not previously covered by the provisions of the current Law No. 7 of 1999.
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For Emiratis working in the public sector, government entities will contribute 15 per cent towards monthly pension contributions while the employees pay the remaining 11 per cent who joined from October 31, 2023. Under the previous law, the government entity paid 15 per cent and the employee paid 5 per cent.
The maximum pension amount for government sector employees is Dh100,000 and Dh70,000 for Emiratis in the private sector employees. While the minimum pension is Dh10,000 a month.
The new law has been issued to benefit from the Emirati workforce’s experience for a longer period, raise the value of the retirement pension as employment years increase and create a financial balance between the General Pension and Social Security Authority’s (GPSSA) revenues and expenditures for financial sustainability.
The other objectives of the new law are to link pension to inflation amidst rising cost of living, offer public and private sector employees equal contributions and gratuity rights and provide a social insurance system that enables females to carry out their family obligations through offering preferential pension conditions such as a reduction in employment years.
The Authority clarified that the government entities and private sector firms that employ UAE citizens are offered two options to pay contributions at the new rates for three months, starting October until December 2023 as per the new law.
The GPSSA added that the entities will not bear any additional amount due to a delay in paying the contribution difference for the three months from October to December 2023, provided that the employer is committed to being accurate in all statements.
Fatima Ahli, contribution section manager for the Benefits Management Department at the GPSSA, added that the new law doesn’t apply to Emiratis employed prior to October 31, 2023, as well as those pensioners who received their pension prior to October 31, 2023, even if they returned to work under the new law. However, they continue to be covered by the 1999 law.
She added that the law also doesn’t apply to Emiratis who have received an end-of-service gratuity before the end of October. It also doesn’t cover ministers who retired prior to October 31, 2023. They will be covered by the 1999 law if they return to work under the new law.
The law is also enforced for the first time for Emiratis who are in UAE-based embassies as well as in regional, international and political missions.
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