News FlashesJanuary 8, 2024

CRS News Flash 13 December 2023 – UAE – New Pensions Law

DECEMBER 2023 – UNITED ARAB EMIRATES (UAE)

NEW PENSIONS LAW
It is important that employers note the following:

UAE 2023 Pensions Law

The United Arab Emirates has published a new decree law on pension, i.e., the UAE Federal Decree Law No. 57 of 2023 (the 2023 Pensions Law), which came into effect on 1 October 2023.

The 2023 Pensions Law is the most significant change to the pensions landscape since the UAE Federal Law No. 7 of 1999, as amended (the 1999 Pensions Law) was first published. The law will apply to citizens joining work for the first time from October 2023 with any employer affiliated with the General Pensions and Social Security Authority (GPSSA).

Entities affiliated with the GPSSA are employers in the federal and local government in all the emirates of the country, with the exception of employers in the local government of the Emirate of Abu Dhabi and the Emirate of Sharjah. The Pensions Authority is also affiliated with employers in the private sector in all emirates of the country, with the exception of employers in the private sector in the Emirate of Abu Dhabi. It is important to note, however, that private sector entities whose headquarters are located in any part of the UAE are subject to the provisions of the Pensions Law, including its branches in other emirates. Entities whose headquarters are in Abu Dhabi, including their branches in other parts of the UAE, are subject to the Abu Dhabi Pensions Law.

It is noteworthy that the 2023 Pensions Law is exclusive to newly hired Emiratis in the UAE. The 1999 Pensions Law is still in effect for all other Emiratis who are currently (or were previously) employed in the UAE and who have registered with the GPSSA for pension reasons. Even if they decide to move to a new employer after 31 October 2023, the provisions of the new law will still not apply (until the 2023 Pensions Law specifically amends this).

Additionally, individuals who receive an end-of-service gratuity in accordance with the current Pensions Law No. (7) of 1999 and decide to return to work after 31 October 2023 remain covered by the provisions of the current law. The new law does not apply to them.

The 2023 Pensions Law stipulates that monthly contributions must be made to the GPSSA. These contributions must be computed based on the employee’s entire salary, including any incentive payments (commission or bonuses), provided that the monthly subscription amount is not less than AED 3,000 and does not exceed AED 70,000. The following are the relevant contributions:

·        Employer: 15%

·        Employee: 11%

·        Government: 2.5% (the government bears 2.5% of the private sector employer’s share for working Emirati nationals whose contribution account salary is less than 20,000 dirhams, to encourage recruiting UAE nationals in the private sector). This is for information purposes only and is not recorded in the payroll system.

The total contribution therefore is 28.5%.

Ensure contributions are paid by the 1st of the following calendar month for which they are due. Where contributions are paid late (beyond the 15th of that month), the employer may be fined in the amount of 0.1% of 10% of the due amount per day.

NOTE
Contributions under the 2023 Pensions Law are payable from 1 January 2024. No late payment penalties or fines will be imposed upon an employer between the effective date and 31 December 2023.

 

The official Federal Decree Law No. 57 of 2023 is not publicly available. To read more about the new law, follow the link to the GPSSA website.

 

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