The Pension and Social Security Contributions scheme is a significant initiative by the government of the United Arab Emirates (UAE). It is managed by the General Pension and Social Security Authority (GPSSA) under the new Federal Decree Law No. 57 of 2023 on Pension and Social Security.
The new law aims to enhance the flexibility of the pension and social security services in the UAE and to mitigate any gaps in services and policies provided to the UAE nationals working in the government and the private sectors.
The law is applicable to Emirati employees who join the labor market for the first time on or after 31 October 2023 in organizations participating in the GPSSA’s pension scheme. Employees registered before that date will continue to be covered by the provisions of Federal Law No. 7 of 1999 on Pension and Social Security.
Knowledge of these contributions, therefore, is relevant for employers to comply with these rules and for employees to become future beneficiaries.
Registration Requirements
For the employer to contribute to the pension, the employee should:
- Be a UAE national.
- Not be less than 18 years; nor should he/she be more than 60 years
- Be medically fit upon appointment according to a medical report provided by a medical authority and approved by GPSSA.
An Emirati national is entitled to a pension if he/she, as an insured person, reach the retirement age of 60 years and complete an insured service period of 15 years.
Who Is Covered Under UAE Social Security?
- Only UAE nationals and GCC citizens working in the UAE can obtain benefits under the UAE social security system.
- The scheme does not cover expatriates, but they have the right to receive gratuity payments.
- It is very important for public and private entities in the UAE to register their Emirati employees with GPSSA from their first month of employment.
Registration of GCC nationals
The UAE government and private sector entities can register their GCC employees under the civil pension authority of the insured’s home country under the scheme of insurance protection extension in coordination with the General Pension and Social Security Authority. The contribution is compulsory under the provisions of the insurance protection extension system.
To be registered, the employee must be
- A citizen from a Gulf Cooperation Council (GCC) country.
- An employee working in the United Arab Emirates.
Contribution Rates Under Federal Decree Law No. 57 of 2023
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For Employees Who Joined On or After 31 October 2023
| Contributor | Contribution Rate |
| Employee | The insured bears a percentage of 11% |
| Employer | The employer pays a percentage of 15% |
| Government | The government bears 2.5% of the percentage for employees in the private sector whose contribution account salaries are less than AED 20,000. |
Note: Contributions are paid on behalf of the insured at a rate of 26% of the contribution account salary in the private sector.
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For Employees Registered Before 31 October 2023
| Contributor | Contribution Rate |
| Insured Employee | 5% |
| Employer (Govt. & Private) | 15% |
| Government (support for the private sector) | 2.5% |
| Total | 20% |
Note: According to Federal Law No. 7 of 1999 for Pension and Social Security and its amendments, contributions are due from the insured at a rate of 20% of the contribution account salary
Salary Thresholds and Contribution Account Salary (under Federal Law No. 57 of 2023)
Maximum and Minimum Salary Caps
| Sector | Basis for Contribution Account Salary | Salary Range |
| Government | The calculation is based on : - the insured’s basic salary,
- cost of living allowance,
- social allowance for children and the insured,
- in addition to housing allowance
| Does not exceed AED 100,000. |
| Private | Based on the salary stated in the employment contract | AED 3,000 (min) to AED 70,000 (max) |
Applicable Laws and Authorities
The UAE social security is administered under several sets of legal regulations. The most important legislation includes
- Federal Law No. 7 of 1999: It covers UAE nationals who served in their employment before 31st October 2023.
- Federal Decree Law No. 57 of 2023: It asserts that these provisions shall be applicable to UAE nationals who began their employment on or after 31 October 2023.
- General Pension and Social Security Authority (GPSSA): This body governs the pension and social security system for UAE nationals working in all emirates except Abu Dhabi.
- Abu Dhabi Pension Fund (ADPF): This is the authority that manages the pension for Emiratis working in Abu Dhabi.
- GCC Pension Coordination: Provides pension contributions for GCC nationals under the laws of their respective home countries.
Pension Benefits and Retirement Eligibility
Under the new 2023 law, pension benefits are calculated as follows:
- Pension Calculation Rate:
- The pension is calculated at 2.67% of pension salary for each year of service until the employee reaches thirty years of service.
- The pension rate increases to 4% for each year of the subscription periods that exceed that, up to a maximum of 100%) of this salary.
- Start and End of Pension:
The Insured’s right to Pension starts on the day following the end of his service and is terminated upon his death.
- Counting Partial Months
Part of a month is considered a full month when calculating the subscription period
- Minimum Pension
The minimum pension for the insured shall be ten thousand (10,000) AED per month, provided that the Government shall pay the financial differences arising from this to the GPSSA.
- Bonus for Extra Service
If the subscription period exceeds thirty-five (35) years, the Insured shall be granted a reward. For every extra year beyond 35, they get an extra three months’ worth of their pension salary as a reward.
Registration and Compliance Obligations
In order to remain compliant with UAE social security laws, employers must carry out the following:
- Register UAE national and GCC national employees with GPSSA within thirty (30) days as of the date of joining the service.
- Provide the GPSSA with the names of the insured persons whose services end within fifteen (15) days at most as of the date of the end of their services.
- Provide GPSSA, upon its request, the insured’s salaries and all necessary documents for the purposes of calculating the prescribed subscriptions (mandatory monthly contributions) within ten (10) days as of the date of the application.
- The employer is obligated to the GPSSA to pay its share of the subscriptions, as well as the insured’s share that it deducts from his salary.
Penalties for Non-Compliance
The penalties for failure to comply with a Social Security regulation are
- In the event of a delay in paying its share of the subscriptions, it is obligated to pay an additional amount of 0.1% of the subscriptions due for each day of delay.
- The employer is liable to pay AED 200 for each day of delay in registration of the employee.
- The employer is liable to pay AED 100 per day in case of a delay in document submission as requested by GPSSA.
- Every employer in the Private Sector shall be punished with a maximum fine of fifty thousand (50,000) AED for each employee on whose behalf it has not subscribed to the GPSSA.
- A penalty of imprisonment and/or a fine not exceeding fifty thousand (50,000) AED shall be imposed on anyone who intentionally gives incorrect data or intentionally refrains from giving the data.
Eligibility and Early Retirement Criteria for Emirati Nationals
An Emirati national is entitled to a pension if he/she, as an insured person, reaches the retirement age of 60 years and completes an insured service period of 15 years.
Early retirement pension
An Emirati national may be eligible for an early retirement pension if:
- For those employed before 31 Oct 2023:
- An insured man reaches 55 years and completes 20 years of insured service.
- An insured woman reaches 50 years and completes 20 years of insured service.
- Under Federal Decree Law No. 57 of 2023 (for those joining after 31 Oct 2023):
- Minimum age: 55 years
- Minimum service: 30 years
- Special case: Mothers of 5+ children may request early retirement with reduced age/service requirements.
Exclusions and Special Cases
The following are excluded under the new legislation:
- Employees already on pensions under Federal Law No. 7 of 1999.
- Employees who got end-of-service gratuity under the previous law and were reemployed.
- Expatriate employees (non-GCC nationals).
How FAR Consulting Middle East Can Help
FAR Consulting Middle East gives professional assistance to businesses and HR outsourcing in UAE to comply with the social security rules in the UAE. The services offered by FAR Consulting Middle East include:
- Identifying the appropriate pension law applicable to each employee
- Registering the staff under GPSSA or ADPF
- Establishing a payroll system that has aligned contribution rates
- Keeping a check on timelines for payments and required documents
- Verifying records at your company to avoid making costly and legal mistakes.
Contact FAR Consulting Middle East today for assistance on social contributions in the UAE. Our team is more than ready to help.
