Insured Emiratis should understand the pension law's rules, provisions and terms to calculate their retirement pension
It is important that new Emirati employees who have registered with the General Pension and Social Security Authority (GPSSA) for the first time starting October 31, 2023 are aware of the mechanisms by which their contribution account salaries are calculated.
This calculation serves as the foundation for determining contributions and due amounts, as per the new Federal Law No. (57) of 2023. Newly insured members under the new law receive 2.67 perc ent of the pension rate for each year of their contribution period for up to 30 years.
When the insured exceed 30 years of contributions, that rate increases by 4 per cent each year, making them eligible to receive 100 per cent of the pension amount once the employment period reaches a maximum of 35 years.
Insured Emiratis should be aware of the rules, provisions and terminologies governing the pension law to be able to calculate their own retirement pension.
For this purpose, the GPSSA launched the ‘Know Your Law’ awareness campaign at the beginning of the year following the introduction of the 2023 federal pension and social security law, with the intent of helping insured employees understand how they can calculate their pension amount.
The contribution account salary is the first and most important process by which contributions are calculated and insurance benefits are paid. Additionally, the contribution account salary determines the required amount to be deducted from the insured’s monthly salary.
Simply put, the contribution account salary serves as an introduction to enhancing one’s insurance and pension awareness in general.
The GPSSA explains how the contribution account salary is calculated for insured Emiratis, as it is the initial step when calculating the retirement pension.
For Emiratis working in the government sector, the contribution salary is based on the insured’s basic monthly salary, cost of living allowance, social allowance for children, social allowance for the citizen, as well as housing allowance, provided that it does not exceed the contribution account salary, with a maximum amount of Dh100,000.
For Emiratis working in the private sector, the contribution account salary is based on the salary determined by the employment contract, provided that the contribution account salary is not less than Dh3,000 and does not exceed Dh70,000.
The contribution account salary for insured Emiratis who work in any regional or international missions, or as foreign politicians working in the UAE, is calculated based on the basic salary specified in the employment contract, in addition to benefits, bonuses, or allowances granted during the employment duration in accordance with the contribution account salary determined in the private sector.
This is the second most important term to understand, as it includes calculating the retirement pension for employees working in both the government and private sectors, as well as those employed in diplomatic and political missions for the last six years of the contribution period, or the entire contribution period if it is less than that.
The value of the average contribution account salary is calculated by multiplying the contribution account salary for each of the last six employment years by 12 months. The amount is then compiled and divided by 72 months.
The pension calculation salary is the total amount given to insured Emiratis once they are ready to retire and receive their pension. The entitled percentage is calculated based on the number of years the insured has spent working.
As mentioned at the beginning of this document, pension is calculated at the rate of 2.67 per cent of the pension calculation salary for each year within a contribution period of 30 years.
This percentage increases by 4 per cent for every year exceeding this period, until the employment period reaches 35 years, during which the insured is eligible to receive the entire pension amount.
It is important to note that the method and provisions for calculating pensions differ for ministers, the council of ministers and representatives, in addition to the difference in the maximum salary when calculating contributions. Article (20) of Federal Decree-Law No. 57 of 2023 clarifies these provisions.
For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004. Follow The Law Reporters on WhatsApp Channels.
More From TLR
Strengthening AML Oversight: UAE’s New Federal Decree and Its Implications
New UAE Telemarketing Regulations: Improved Consumer Protections and Reporting
Abu Dhabi Cracks Down on Influencer Advertising: New Compliance Rules and Penalties
Related News
Back-to-School Traffic: How Parents Can Prevent Congestion, Avoid Fines of up to Dh1,000
What Non-British Expatriates Need to Know Before Purchasing Real Estate in the UK
Egypt President Orders Quick Reform of Pre-Trial Detention Following National Dialogue
We use cookies and similar technologies that are necessary to operate the website. Additional cookies are used to perform analysis of website usage. By continuing to use our website, you consent to our use of cookies. For more information, please read our Cookies Policy.
Closing this modal default settings will be saved.