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The 2023 Pensions Law is the most significant change to the UAE pensions landscape since the 1999 Pensions Law was first published. Importantly, the 2023 Pensions Law only applies to new Emiratis joining the UAE workforce. For all other Emiratis currently (or historically) employed in the UAE and registered for pension purposes with the General Pensions and Social Security Authority (GPSSA), the 1999 Pensions Law continues to remain the operative law (save as where expressly amended by the 2023 Pensions Law).

The key provisions of the 2023 Pensions Law for the private sector are summarised below.

Pension Contributions

Contributions must be made on a monthly basis to the GPSSA and calculated with regard to the employee’s full salary inclusive of any incentive payments (e.g. bonuses or commission). The respective contributions are as follows:

  • Employer: 15% (of which 2.5% will be paid by the Government where an employee earns less than AED 20,000);
  • Employee: 11%.

The total contribution therefore is 26%.

Pensionable Cap

Under the 1999 Pensions Law, the pensionable cap is AED 50,000, meaning that if an individual is earning more than AED 50,000 per month, pension contributions will only be calculated on the basis of AED 50,000 and any additional earnings will not be considered for the purposes of pension contributions.

The pensionable cap under the 2023 Pensions Law is AED 70,000.

Interestingly, the 1999 Pensions Law requires an employer to make good any difference between the pension payments made and a potential end of service gratuity entitlement where an individual’s monthly salary exceeds AED 50,000, so that an employee who earns more than AED 50,000 per month is not disadvantaged by way of the cap. The 2023 Pensions Law does not provide for a similar benefit.

Service Periods

The 2023 Pensions Law provides that all contributions (employer, employee and government) must continue to be made during periods of leave, even where that leave period is unpaid (for example, where an individual takes more than 45 calendar days of sick leave, any further sick leave is taken on an unpaid basis). Contributions should also continue to be made during periods of secondment and study leave. However, where an individual is suspended without pay, has agreed to a period of unpaid leave with their employer, or is otherwise not entitled to salary, contributions can be withheld. This provision also applies to those individuals governed by the 1999 Pensions Law.

Notwithstanding this, for those individuals subject to the 2023 Pensions Law, where an individual takes a period of unpaid leave for either study leave or childcare leave (female employees only), they may request that the pension contributions continue throughout the period of leave, provided that the individual pays all contributions due during that period.

Employer’s Obligations

Under the 2023 Pensions Law, employers are obligated to:

  • Register eligible employees with the GPSSA within one month of the commencement of their employment. Within 15 calendar days of the end of an employee’s employment, the employer must update the GPSSA. Failure to comply will result in fines being imposed by the GPSSA of AED 200 per day in addition to a one-off lump sum fine of up to AED 50,000 per employee.
  • Provide the GPSSA with any and all documentation required in order for the employee’s contributions to be accurately calculated within ten calendar days of the date of the initial registration application. Any delay will result in fines of AED 100 per day being imposed by the GPSSA, and in those circumstances the GPSSA will have sole discretion to calculate the contributions due to the employee.
  • Pay contributions to the GPSSA on a monthly basis. The employee’s contributions should be deducted directly from their salary. Significantly, the 2023 Pensions Law provides that in the first and last month of employment, even where the full month is not worked by the employee, the contributions should not be pro-rated.
  • Ensure contributions are paid by the first day 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.
  • Ensure that contributions are made accurately having regard to the employee’s actual salary. Failure to do so can result in the GPSSA requiring the employer to pay an additional amount of 10% of the contribution due.


In addition to the above penalties, where an employer intentionally provides incorrect data to the GPSSA or intentionally refuses to provide the data requested by the GPSSA, with the aim of either unjustly obtaining funds from the GPSSA or preventing payment of the actual contributions due, the employer may be subject to a fine of up to AED 50,000 (per employee). The employer’s authorised representative may also be imprisoned.

Note that as contributions under the 2023 Pensions Law are payable from 1 January 2024, no late payment penalties or fines will be imposed on an employer between the law’s October 2023 effective date and 31 December 2023.

Calculation of Pension

The amount due to an individual by the GPSSA is dependent on a number of different factors:

  • Pension is calculated at a rate of 2.67% of the pension account salary for each year of the contribution periods. Upon reaching 30 years, this rate is increased by 4% annually up to a maximum of 100% of salary.
  • The individual is entitled to pension from the date following termination of employment up to their death.
  • The minimum monthly pension is AED 10,000 per month. Where the amount due (calculated as above) is less than AED 10,000, then the GPSSA will pay the difference.
  • If the total subscription period exceeds 35 years, the individual will be paid at a rate of three months for each year above the 35-year period calculated on the basis of the pension account salary.

Takeaway for Employers

It is important that all UAE companies (with the exception of those subject to the Abu Dhabi Pension Fund and Sharjah Pension Fund) are aware of the 2023 Pensions Law in respect of new Emirati hires to ensure that the provisions of the 2023 Pensions Law are complied with, and fines and other penalties are not imposed by the GPSSA (or otherwise).

Global HR Law Guide - Pensions