Pension regulations in the United Arab Emirates are different and somewhat complex, and in a recent update, the Gulf nation conveyed new guidelines to state-run, and private entities about pension transfer.
The new regulation said all private and government hiring people are bound to pay 26 percent of their income as a pension.
Abu Dhabi made changes under Decree Law No. (57) 2023, ruling that entities that hired citizens prior to October 31 need to pay an additional amount under Law No. 7 of 1999. Authorities also notified these changes as Emiratis were not previously covered under Law No. 7 of 1999.
With new changes in place, all entities including private firms will have two options to pay the new pension amount. In the first case, employers can make the payment contributions for October, November, and December 2023 at the previous rate of 20pc and pay the difference by the end of this year.
The second option allows employers to pay the entire 26pc pension amount, starting from October 2023.
The new legislation about pensions aimed to amplify the value of retirement pensions as it increases employment years besides creating a balance between Social Security Authority’s revenues and General Pension.
Before this legislation, private firms used to pay 5 percent of monthly contribution salary while employers contributed 12.5 percent, and the government covered the remaining 2.5 percent.
The circular said the maximum contribution account salary for govt employees is AED100,000, and in the case of private employees, the amount stands at AED70,000.
It further clarified that UAE citizens who received end-of-service gratuity before October 31 cannot avail the new scheme. Ministers stepping down from their role before given date, however, remain covered by 1999 law.
The new Pension Law aimed to maintain a balance between insurers from the government and private firm. It allows pensioner with a subscription period of 30 years to combine their pension with salary, irrespective of their value.
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