UAE pension, social security laws: Know the difference
GPSSA explains how contributions are calculated in accordance to the applicable law
Abu Dhabi: The General Pension and Social Security Authority (GPSSA) in the UAE on Tuesday clarified the importance of differentiating between the contribution requirements under pension and social security laws affiliated with the authority.
To start with, a contribution account salary is the salary by which an employer share and the insured Emirati's share of contributions are due from the beginning of each month. The longer a person contributes, the better the pension or end-of-service benefits are.
The contribution amount as per Federal Law No. (57) of 2023 regarding pension and social security is 26 per cent, out of which insured Emiratis who have joined the workforce starting October 31, 2023 bears a percentage of 11 per cent, while the employer pays 15 per cent; these contributions are paid according to the insured’s contribution account salary. The government bears a 2.5 per cent share on behalf of private sector employees whose contribution account salaries are less than Dh20,000 as a form of support for Emiratis working in the private sector.
The provisions for Federal Law No. (7) of 1999 for pension and social security and its amendments apply to Emiratis employed prior to October 31, 2023, and entail a total of 20 per cent in contributions, out of which the insured bears five per cent, whereas the government and private sector bear 15 per cent. The UAE government pays 2.5 per cent of the percentage owed by the private sector entity as a form of support, similar to the 2023 federal law.
The components and elements of the contribution account salary, which is subject to deduction for Emirati employees working in the government sector, includes the insured’s basic salary, cost of living allowance, social allowance for children and the insured, as well as housing allowance, given that the contribution account salary of the insured does not exceed Dh100,000.
The law specifies the contribution account salary for private sector employees at a payment determined by their employment contract, so that the contribution account salary is not less than Dh3,000 and not more than Dh70,000.
The contribution account salary for insured individuals employed in regional, international or foreign missions operating in the UAE, is based on the basic salary of the insured specified in the employment contract in addition to benefits, bonuses or allowances that are granted in exchange for his/her work.
The decree indicates that GPSSA’s Board of Directors may determine the elements that are included in calculating the contribution account salary in cases whereby the employer applies a schedule for his/her employees’ salaries, contrary to what is stipulated in the provisions for calculating the contribution account salary.
According to the current Law No. 9 of 1999, the contribution account salary is Dh300,000 in the government sector and Dh50,000 in the private sector. An insured Emirati working in any regional, international or foreign missions operating in the UAE are not included in Law No. 9 of 1999, while they are included in the new Federal Decree Law No. (57) of 2023, with a maximum ceiling set for their contribution account salary at the same level as that of the private sector.