New Pension Law UAE

UAE Federal Pension Law 2023, was published and got enforced on 2^nd October 2023. Very first time, the Pension Law was introduced and published in 1999. It was the very first Pension Law in UAE. Recently there has been a big change in the previous Pension Law.

The UAE Federal Pension Law UAE 2023, is only applicable to new Emiratis entering in to the workforce. The old registration of the Emirati workforce as per 1999 Pension Law, will not be entitled to qualify for the new Pension Law. They will continue with 1999 Pension Law. The important points are as follows;

As per the Pension Law 2023, every month the pension contribution should be made. It is calculated as the employee’s full salary with the commissions or bonuses. The contribution details are as follows;

• Employer Contribution is 15% and out of which 2.5% will be paid by the Government if the employee earns less than 20000 AED.
• Employee contribution is 11%.
• It makes a total contribution as 26%.

First, we need to understand the concept of Pensionable Cap. For example, if the pensionable Cap is 50000 AED, then it means, if any individual earns more than 50000 AED, then the calculation will be made on 50000 AED. There will be no consideration for additional earnings. The recent Pension Law 2023 tells us that, the pension cap is a maximum 70000 AED.

This new law also suggests that all the contributions by its participants e.g. government, employer, and employee should be kept continued even in leaves, paid leaves, sick paid leaves, and sick unpaid leaves. But if the employee has been suspended, without pay, and agreed on unpaid leaves for a certain period of time, then the pension contributions can be stopped. Law permits that contributions can be withheld. 

As per the new Pension Law 2023, employers have to follow a few rules and conditions as follows;

• Employers have to register all the employees. Employee registration has to be with GPSSA. Maximum 1 month time is available from the time employment is started. If the employer does not fulfil the rules, he can be fined by GPSSA which is 200 AED per day with a lumpsum fine of 50000 AED.
• Employers have 10 days to submit all the required documents. The delay here will fine 100 AED in a day. This fine is also imposed by GPSSA here. The contribution has to be made on a monthly basis.
• There is no pro-rate payment contribution. Even if the employee has not worked for a complete month. For example, if he starts at 10th of a month or stops working at 20th of a month, then Pro Rata will not be applicable.
• Contribution should be made, based on the real salary of employee. Any false declaration can result in fine and penalties. The fine amount of 50000 AED can be imposed otherwise.
• As per GPSSA rules, if the employer does pay the contribution, then 10% of the Due contribution can also be a fine or additional payment.

There are few factors for calculating the pension;

• It is calculated on Pension Salary for a year at the rate of 2.67%, of the contribution period. But when 30 years are increased then the rate is also increased to 4% annually or can be a maximum of 100% of the salary.
• Pension has to be paid from the last day of service, termination, and resignation to the last day of life.
• New Pension Law 2023 also states the minimum amount of salary which is 10000 AED. If the calculated amount is less than 10000 AED then GPSSA will manage the difference in minimum pension amount.
• If the total pension subscription exceeds 35 years, then the person will be paid at three months for each year, which is more than 35 years, but calculated on pension account salary.

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