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Federal Decree Law Enhances Pension and Social Security in UAE

The law establishes a contribution structure in which the insured contributes 26% of their account wage, while the employer and government contribute 15% and 2.5%, respectively.

The General Pension and Social Security Authority has announced a groundbreaking Federal Decree Law to improve the efficiency and sustainability of pension resources. 

The law focuses on honoring future commitments, enhancing flexibility in pension and social security services, and addressing gaps in services for UAE nationals in both government and private sectors.

Equality in Insurance Benefits:

One of the key objectives is to bring about greater equality in insurance benefits, particularly encouraging UAE nationals to join private sector companies. 

The law will apply to Emirati employees entering the labor market after its publication, fostering fairness and inclusivity in the insurance framework.

Contribution Structure and Government Support:

The law defines a contribution structure wherein the insured contributes 26% of their account salary, with the employer and government bearing 15% and 2.5%, respectively. 

This is especially geared towards incentivizing the employment of Emirati nationals in the private sector.

To streamline regulations between government and private sectors, the law establishes a unified pension calculation mechanism based on the average contribution account salary over the last six years of the subscription period. 

This move promotes consistency in pension calculations for employees across sectors.

Retirement Criteria and Family Benefits:

The law sets the minimum age for entitlement to a retirement pension at 55 years, with a minimum subscription period of 30 years. 

Additionally, it grants working mothers more flexibility by allowing them to apply for retirement pension entitlement at a younger age and with a shorter subscription period, recognizing the vital role of families in society.

Subscription Salary Determination:

The monthly subscription salary for the government sector includes the basic salary, allowances, and social benefits. In contrast, the wage is determined by the employment contract within a specified range in the private sector.

Insured individuals can benefit from optional subscriptions during unpaid leave for postgraduate studies. 

Moreover, the law allows the purchase of a nominal period adjoining actual service periods, provided certain conditions are met.

Pension Combination and Suspension Conditions:

Pensioners with a subscription period of 30 years have the right to combine the pension with salary, irrespective of their value. 

The law outlines conditions for suspending pension payments if the pensioner takes up a new job covered by the law, with compensation considerations.

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