New UAE Pensions Law

16 January 2024 4 min read

By Jawad Elazar

At a glance

  • On 2 October 2023, UAE Federal Decree Law No. 57 of 2023 (2023 Pensions Law) was published and came into effect.
  • The 2023 Pensions Law only applies to new and eligible UAE nationals joining the UAE workforce.
  • All other eligible UAE nationals currently or historically employed in the UAE and registered for pensions purposes with the General Pension and Social Security Authority (GPSSA), the UAE Federal Decree Law No. 7 of 1999 (1999 Pensions Law), this continues to remain the operative law (unless it has been expressly amended by the 2023 Pensions Law).

On 2 October 2023, the 2023 Pensions Law was published and came into effect, applying only to new and eligible UAE nationals joining the UAE workforce. The 1999 Pensions Law continues to remain operative law for all other eligible UAE nationals who are currently or historically employed in the UAE and registered for pensions purposes with the GPSSA.

The 2023 Pensions Law has introduced reformations to the pension contribution scheme, including amendments to the:

  • monthly pension contributions rates;
  • pensionable salary cap;
  • eligible service periods;
  • retirement guidelines;
  • calculation and payments of pension; and
  • fines and penalties for non-compliance.

Pension Contributions

Pension contributions should be made monthly to the GPSSA and calculated with regard to the employee’s full salary (inclusive of any incentive payments). The contributions are split up as follows:

  • 15% paid by the employer (of which 2.5% will be paid by the government where an employee works in the private sector and his/her monthly salary is less than AED20,000); and
  • 11% paid by the employee.

Pension contributions should not be pro-rated for months that are partly worked by the employee, but instead be paid as a full month.

Pensionable Cap

The maximum salary threshold to which the pension rates can be applied to has increased. For employees working in the public sector, the pensionable cap increased from AED50,000 to AED100,000 and, for employees working in the private sector, the pensionable cap increased from AED50,000 to AED70,000. While the 1999 Pensions Law provided for a potential end of service gratuity entitlement for the amount of salary over the pensionable cap, the 2023 Pensions Law does not provide for a similar benefit.

Eligible service periods

All contributions should continue to be made during periods of leave, secondments, and during any periods for which the employee is not entitled to a salary or a full salary, including, but not limited to, study leave, sick leave and secondments. The rules for calculating the contributions during periods of leave and secondments and the party required to pay such contributions shall be determined in a decision of the board of directors of the GPSSA. Where an employee is suspended without pay or absent from work for which it is decided to deprive the employee of their salary, contributions can be withheld. This provision also applies to employees governed by the 1999 Pensions Law.

For employees governed by the 2023 Pensions Law, where a period of unpaid leave is taken for either study leave or childcare (for a maximum of three consecutive or intermittent years), the employee may request the contributions continue throughout such periods of leave, provided that the employee pays all contributions due during the period.

Retirement entitlement

The minimum age for the employee to be entitled for a retirement pension is 55 years with a minimum subscription period of 30 years. However, the 2023 Pensions Law allows working mothers to apply for the retirement pension entitlement at a younger age and with a shorter minimum subscription period.

Employees may request for the purchase of a nominal period to be consolidated with his/her actual period of service provided that the employee has worked an actual period of at least 25 years when submitting the purchase request, or an actual period of 15 years if he/she has reached the age of 60 years. The period required to be purchased should not exceed five years for both men and women.

Calculation of Pension

For employees of both the public and private sector, the amount due to the employee by the GPSSA is determined based on the average contributable salary of the last six years of the subscription period, or, if less, the entire subscription period.

The amount due to the employee by the GPSSA shall be calculated at the rate of 2.67% of the pensionable salary for each year of the subscription period up until 30 years. For each year following the 30-year period, the rate shall increase by 4% annually up to a maximum of 100% of the pensionable salary.

The minimum monthly pension is AED10,000 per month. Where the amount due is less than AED10,000, the GPSSA will pay the difference.

If the total subscription period exceeds 35 years, the employee shall be paid at a rate of three months for each year above the 35-year period calculated on the basis of the pensionable salary.


The changes introduced by the 2023 Pensions Law aim to promote the hiring of UAE nationals and provide guidance on how companies are to implement the new contribution rates. It is important to note these changes for new and eligible UAE national hires to ensure the provisions are complied with and to avoid any fines and other penalties. We note that contribution payments under the 2023 Pensions Law are payable from 1 January 2024.