UAE introduces new federal law on pension for enhanced flexibility of social security services
Emiratis in the private sector will benefit from an increased maximum contribution account salary, soaring from Dh50,000 to Dh70,000, enhancing the scope and effectiveness of social security services.
Abu Dhabi: A new Federal Decree Law No. 57 of 2023 on Pension and Social Security has been announced by the General Pension and Social Security Authority (GPSSA). This decree raises the maximum contribution account salary for Emiratis employed in the private sector from Dh50,000 to Dh70,000. The new law seeks to uphold the Authority's future obligations while enhancing GPSSA policies and the way it operates. It also strives to guarantee the effectiveness and sustainability of pension funds.
Additionally, it seeks to close any gaps in the services and policies offered to UAE citizens employed by the public and private sectors, as well as to improve the flexibility of the country's social security and pension systems. Additionally, the law will increase insurance benefit parity in order to encourage UAE citizens to work for private companies.
Emirati employees who entered the workforce for the first time on the date of the new Federal Decree Law's publication will be subject to its application in firms that take part in the GPSSA. The terms of the current Federal Law No. (7) of 1999 on Pension and Social Security will continue to apply to participants who are current employees.
The terms of Federal Law No. (7) of 1999, as mentioned, or any other prior law must continue to apply to the pensioner who is receiving benefits in line with them. The insured individual who obtained an end-of-service bonus under Federal Law No. 7 of 1999 or any prior legislation will remain protected under the current Federal Law No. (7) of 1999, even if they began working for a new employer after the new Federal Decree Law No. (57) of 2023 went into effect.
The insurance company will pay 11% of the insured's contribution account salary each month, the employer will pay 15% of the insured's contribution account salary, and the government will pay 2.5% of the private sector employer's share for working Emirati nationals whose contribution account salary is less than Dh20,000 in order to promote hiring UAE nationals in the private sector.
A minimum subscription period of 30 years is required, and the covered person must be 55 years of age to be eligible for a retirement pension. The new Law provides additional flexibility and rewards to working mothers in support of the family's essential role in society. It states that working mothers have a shorter subscription period and a younger age at which to apply for retirement pension entitlement.