GPSSA’s contribution salary is calculated on January of each year for Emiratis employed in the private sector
Abu Dhabi, 15th December 2022: As a continuation to the NAFIS awareness campaign to ensure Emiratis employed in the private sector take advantage of the pension benefits as per the UAE federal law, the General Pension and Social Security Authority (GPSSA) explains the basis by which contributions are calculated on January of each year for an insured individual.
By definition, an insured individual is an Emirati male or female insured by the GPSSA and covered by the pension and social security law, enjoying numerous benefits such as pension and end-of-service gratuity schemes.
For that reason, it is of paramount importance that private sector entities register Emirati employees with the GPSSA the moment they join the entity, in order to have them enjoy the pension privileges offered as per the NAFIS program. Before doing that however, it is advisable to familiarize employers and employees working in the private sector with the pension requirements, and to explain the procedures involved in a contribution calculation salary, which must be paid monthly and regularly by both employees and employers.
Upon registration with the authority, a total of 20% is paid in contributions to GPSSA’s account salary, out of which the employee (the insured individual) pays 5% of his/her share which is deducted from the salary agreed upon in the employment contract – this includes the basic salary, gratuities and allowances; the employer pays 12.5% of the contribution calculation salary and a 2.5% payment is received by the UAE government in support of employment in the private sector.
The contribution salary is calculated on January of each year; this salary serves as the basis of contribution payments within one complete year (i.e. to January of the next month). It is important to note however that no salary increase or decrease is considered after the month of January for private sector employees. If an insured individual joins his/her entity after the month of January, the contribution calculation salary of that month serves as the basis of contribution payments until next January. The minimum limit for a contribution calculation salary is Dh1,000 and the maximum limit is Dh50,000.
In case of a service commencement or termination, contributions are paid to the GPSSA for the full month by which the service started, however this does not include the part of the month when an employee got terminated.
In the event of secondment and vacations, the payment of contributions continues given that the employer, to which the insured is seconded, pays a share in contributions if that entity bears the insured salary during the period of secondment. Insured individuals however must continue to pay their share in contributions.
