United Arab Emirates: Changes to social security for new members

Employer Action Code: Act

Decree Law 57 of 2023 introduces changes to contribution and benefit provisions under the General Pension Social Security Authority (GPSSA) retirement system, for workers who first join the system on or after October 31, 2023. The GPSSA covers U.A.E. citizens and Gulf Cooperation Council nationals who work in the U.A.E. public or private sectors — except for all employees in the emirate of Abu Dhabi and public employees in Sharjah, who are covered by separate systems. The GPSSA reported that it had about 104,000 active participants as of June 2023, the majority of whom work in the public sector. The new law aims to improve the financial sustainability of the GPSSA and to reduce benefit provision gaps between public- and private-sector workers, dovetailing with the government’s Emiratization program (i.e., increasing the share of the private-sector workforce that is made up of Emiratis — see this Global News Brief: U.A.E.: Revised Emiratization framework announced). In July 2023, the government expanded its Emiratization program to require companies in 14 sectors that have 20 to 49 employees to hire at least one Emirati in 2024 and another one in 2025 or face fines.

Key details

Key changes applicable to Emirati private-sector employees first joining GPSSA on or after October 31, 2023, include:

• The rate of employee contributions to GPSSA is 11% of covered pay (the rate remains 5% for prior joiners). The contribution rate for employers is 12.5% for employees with monthly covered pay below 20,000 U.A.E. dirhams (AED), and 15% for other employees (the rate remains 12.5% for all prior joiners). The government contributes 2.5% of covered pay for those earning below AED 20,000.
• Monthly covered pay is capped at AED 70,000 (the cap remains AED 50,000 for prior joiners). For new public employees, this cap is now AED 100,000 (AED 300,000 for prior joiners).
• The minimum eligibility requirements for commencing retirement benefits is attaining age 55 and 30 years of coverage (age 50 and 20 years for prior joiners).
• Pension benefits are calculated based on the average of the final six years of earnings (five years for prior joiners).
• Employers must register eligible employees with GPSSA within one month after the start of employment and notify GPSSA within 15 calendar days after the end of employment.

Employer implications

Employers should review and comply with the GPSSA reforms and ensure that they meet the Emiratization targets for their industry and head count. According to the government, around 12,000 businesses are subject to the latest Emiratization mandate.    

Contact

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Michael Brough

Senior Director, Integrated & Global Solutions

email Email phone +971 50 189 5816

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