Dubai: Entities which have hired Emiratis as of October 31, 2023 will have to pay 26 per cent of their incomes towards pension under Decree Law No. (57) 2023, while entities that hired Emiratis prior to October 31 will continue to pay 20 per cent as stated under Law No. 7 of 1999.
This was disclosed at a press conference held by the General Pension and Social Security Authority at a press conference held in Dubai today.
A circular has been sent to government and private entities with a detailed guideline on ways to transfer the pension for Emiratis joining the workforce as of October 31, 2023 and who were not previously covered by Law No. 7 of 1999, it was disclosed.
How to pay the pension under the new law
Under the new law, government and private sector employers have two options to pay the new pension amount.
Pensioners can pay contributions for three months (October, November, and December 2023) as per the previous rate of 20 per cent and pay the difference amount of six per cent by January 1, 2024.
The second option available is for pensioners to pay the entire pension amount of 26 per cent in accordance with Law No. (57) of 2023, starting from the date the insured joined work as of October 2023, regardless of the day.
Breakdown of the pension
Under the new law, the insured bears 11 per cent of the pension amount, while the employer pays the rest of the 15 per cent. For Emiratis working in the private sector whose contribution account salaries are less than Dh20,000, a rate of 2.5 per cent will be borne by the UAE government as a form of support and encouragement to hire more Emiratis in the private sector.
Maximum contribution account salary
The percentage of contributions paid according to the contribution account salary is a maximum of Dh100,000 for government sector employees and Dh70,000 for private sector employees, given that the contribution account salary of the employee working in the private sector is not less than Dh3,000.
Entities will not bear any additional amount as a result of a delay in paying the contribution differences for the three months from October to December 2023, provided that the employer is committed to being accurate in all statements, data and documents submitted, including details of the insured’s salaries and all the necessary documents for the purposes of calculating the assessed contributions, in accordance with the provisions of this legal decree, since this has a huge impact on balance statements created later by the GPSSA.
GPSSA stressed on the importance of updating insured Emiratis covered by Law No. (57) of 2023 in order for the seamless transfer of pension. The authority urged entities to send their designated employees to attend workshops and follow-up on GPSSA’s awareness campaigns regarding insurance obligations and benefits affiliated with the new law.
The law also does not apply to Emiratis who have received an end-of-service gratuity prior to October 31, 2023, even if they return to work after they remain covered by the 1999 law. Ministers who retire prior to October 31, 2023 even if they return to work after, are not covered under the new law.
Highlights of the retirement pension
2.67% of the pension account salary for each of the 30 years of service, at a rate of 80 per cent
4 per cent of the pension account salary for each year over 30 years, at a rate of 20 per cent
100 per of the pension account salary for a period of service of 35 years
Payment of end-of-service gratuity at the rate of 3 months’ salary for a period of service exceeding (35) years.
Beginning of disbursement of retirement pension: from the day following the end of service.
The minimum pension is Dh10,000.