GPSSA reviews the most prominent features of Federal Law No. (57) of 2023
During the 2024 Media Forum
Abu Dhabi, 22nd February 2023 – Members of the media were familiarized with the most prominent insurance and pension features of Federal Law No. (57) of 2023 during the 2024 annual forum organized by the General Pension and Social Security Authority (GPSSA) at its Dubai office headquarters, located in Silicon Oasis.
During her opening remarks, Dr. Maysa Rashed Ghadeer, Government Communications head at the GPSSA, spoke about the importance of raising awareness regarding proactive financial planning while employed and prior to retiring. “The media plays a pivotal role in helping us raise awareness regarding the most prominent features of the new law in a relatable manner to members of the public, offering valuable guidance and advise on insurance rights, an insured Emirati’s obligations towards pension funds and methods concerned with analyzing calculations.”
Dr. Maysa added that raising awareness encourages insured Emiratis to think about their financial needs in a clearer way, thus increasing the chances of receiving some of the best benefits that lead to a living a more sustainable and healthier lifestyle, especially during the retirement stage.
The most prominent features of Federal Decree Law No. (57) of 2023 were highlighted during the forum, some of which included the laws objective to benefit from Emirati expertise for the longest possible period in the labor market by offering equal privileges for Emiratis employed in both the private and government sectors; this is being done by creating a balance between deductions and entitlements to ensure sustainability of the fund and its ability to fulfill its obligations towards future generations.
Additionally, the law consists of beneficial features such as the ability to merge employment years and a flexible social security scheme that supports a female’s role in looking out for her children and family through offering preferential conditions that give female employees the option to reduce their employment years and receive their pension amount.
Since pension and social security are linked to inflation rates, the law considers the high cost of living and preserves an insured’s rights. This is evident in the fact that Federal Law No. (57) of 2023 does not apply to Emiratis employed prior to 31st October 2023. Likewise, the new law does not apply to individuals who received their pension before 31st October 2023. If a pensioner has returned to work under the new law, he still remains covered by the 1999 federal law. The new law does not apply to Emiratis who have received their end-of-service gratuity prior to the 31st October 2023, even if they decide to return back to the labor market.
Reduce gaps
In order to reduce gaps amongst Emirati’s employed in the government and private sectors, the law stipulates raising the maximum ceiling for the contribution account salary in the private sector to Dh70,000 and to Dh100,000 in the government sector, thus unifying the method of calculating the average contribution account salary over the last six years of employment in both sectors, making it possible to merge both pension and salary for government and private sector entities if an insured Emirati is employed for 30 years.
Females and the new law
The required employment period for females to be eligible for a pension is 30 years and the age is 55, however the new law allows a reduction in both the minimum period of time contributing and the entitlement age to receive a pension.
Mothers will be allowed to reduce their contribution period by two years, given that they have been working for 28 years. Those who are 52 years of age will be given a reduction of three years to stop contributing, while females with five and six children, will be given a reduction of 3.5 years for the contribution period, given that they have completed 26.5 service years, and a four-year reduction for those who have turned 51 years of age or gave birth to a seventh child.
The new law offers various entitlements to beneficiaries and those eligible to receive a pension, namely a widow, widower, or eligible husband is entitled to receive 40% of the pension amount, whereas female and male children receive 40% of the pension, whereas a father, mother, or both are entitled to 20% of the pension. Females have the advantage of merging their pension or salary to that of their deceased husbands’ pension.
How to calculate pension
Pension is calculated at the rate of 2.67% of the pension calculation salary for each year of contribution periods up to 30 years, and the pension is increased by 4% for each year after 30 years up to a maximum of 100% of the salary. If the contribution period exceeds 35 years, the insured is granted a gratuity for the excess period at the rate of three months for each year calculated on the basis of the pension calculation salary. The Council of Ministers may amend the minimum pension according to inflation rates in the UAE or for any other reason.
Pension entitlement cases
An insured Emirati is entitled to receive a pension as per the provisions of the law if he/she is deceased, has a total disability, is proven to be medically unfit, reaches the minimum retirement period of 15 years based on a referral or has been terminated or removed from a job.
Individuals who have opted for a voluntary resignation are entitled to receive an end-of-service given that they have worked for 30 years and are aged 55.
Contribution rates
As per the 2023 law, the total contribution rates have become 26%, out of which the insured bears 11% and the employer (government and private sector entities) bears 15%. The UAE government supports private sector entities employing Emiratis whose contribution account salaries are less than Dh20,000, by paying 2.5% out of the employers 15% share.
Finally, GPSSA’s board of directors has allowed insured Emiratis who wish to merge employment years the ability to do so, through offering them the choice to retain their end-of-service gratuity upon ending their employment with a particular entity, for the purpose of merging those years with a new employer/entity.
