UAE Announces New Federal Decree Law on Pension

The General Pension and Social Security Authority in UAE has introduced a new Federal Decree Law with the objective of enhancing the policies and operational framework of the GPSSA. The primary goals of this law are to ensure the efficiency and sustainability of pension financial resources, as well as to fulfill future commitments of the authority.

In addition to strengthening the flexibility of pension and social security services in the UAE, the law seeks to address any existing gaps in services and policies for Emirati nationals employed in both government and private sectors. A key aspect is the promotion of equality in insurance benefits to encourage the participation of UAE nationals in private sector companies.

The law will be applicable to Emirati employees entering the labor market for the first time from the date of its publication in organizations participating in the GPSSA. Existing employees will remain covered by the provisions of the current Federal Law No. (7) of 1999 on Pension and Social Security.

For pensioners already receiving benefits under previous laws, coverage will persist, even if they commence a new job after the issuance date of the new Federal Decree Law No. (57) of 2023.

The law defines the monthly contributions for the insured, with the insured contributing 26% of their contribution account salary, the insurer covering 11%, the employer covering 15%, and the government bearing 2.5% of the private sector employer’s share for Emirati nationals earning less than Dh20,000.

To standardize rules between government and private sectors, the pension calculation mechanism is based on the average contribution account salary of the last six years of the subscription period for employees in both sectors.

The minimum age for entitlement to a retirement pension is set at 55 years with a minimum subscription period of 30 years. The new law provides working mothers with added flexibility and benefits, allowing them to apply for retirement pension entitlement at a younger age and with a shorter subscription period.

Furthermore, the law permits the insured to purchase a nominal period of adjoining service, provided they have worked for at least 25 years when submitting the purchase request, or 15 years if they have reached the age of 60. The purchased period should not exceed 5 years for both men and women.

The law also establishes parity between insurers from government and private sectors. Pensioners with a subscription period of 30 years have the right to combine the pension with salary, regardless of their value. The law specifies conditions under which the payment of the pension may be suspended if the pensioner takes up a new job covered by the provisions of the new law, and the subsequent compensation equals or exceeds the pension value. Any difference will be paid if the new salary is less than the pension amount, and the pension will be repaid at the end of service as per the provisions of the Decree Law.

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