Spending at least 20 years in service a condition for purchasing nominal period: GPSSA
Abu Dhabi, 19 July 2022: The purpose for purchasing the nominal service period is to increase the percentage of the pension upon retirement, the General Pension and Social Security Authority (GPSSA) said today.
One of the most important conditions for the purchase is for the insured to fulfill the period required to be entitled to receive a retirement pension, which as specified by the law, requires spending at least 20 years in employment service, the pension authority explained.
Mohamed Saqr Al Hammadi, Head of Pension Operations Department at the GPSSA, said: “The purchase of the service period is not to fulfill the overall period required to obtain the retirement pension or to reach the age condition (50 years old) since the insured individual buys a period of service not an age.”
"Also, the insured cannot count the purchased period to give them the right to combine the pension and the salary when spending 25 years in government work, since this should be an actual service period and not include any purchased service period,” added Al Hammadi.
The law grants males the right to purchase up to five years and females up to ten years and each year purchased gives an insured individual an increase of 2%.
As the purchase is optional, an insured can purchase any number of years specified without the need to purchase the entire period. For example, 20 years of service gives an insured individual a retirement pension at the rate of 70% of the average contribution account salary. In this case, if the insured was a male and he bought five years of service period, his pension rate will increase to 80%.
However, if a female pensioner has bought 10 years of service in the same scenario, her pension increases to 90% of the average contribution salary.
Although the law defines the terms that can be purchased for both males and females, the maximum retirement pension period is 35 years of service.
One of the purchase conditions states that an insured individual must be employed since it is not permissible to purchase after obtaining an end-of-service or a pension unless the pensioner returns to work again.
Purchase costs are calculated as follows:
-The contribution account salary on the date of submitting the purchase order multiplied by 20%
-Multiplied by the period to be purchased in months
As follows: Dh20,000 x 20% x 60 months = Dh240,000
The purchase cost is considered a long-term investment of the retirement pension since the insured recovers the full cost in a short period after retirement, and his/her pension continues to be paid but at a higher percentage than that he/she could have received without purchasing, and this is what makes it one of the important advantages in the Federal Pensions Law.
The insured can pay the cost in one go or in installments so that 50% of the total amount is paid as an advance payment and the rest of the purchase cost is paid on monthly installments, provided that the installment period does not exceed four years or the contributor reaches the age of 60 and that the value of the monthly installment is not less than a quarter of the account salary and that contributions and all purchase costs are paid before the insured's service ends.
In the event of the death of the insured individual, installments continue to be collected from the pensions of those entitled on his/her behalf. If the contributor is unable to pay the full purchase costs, the purchased period is calculated in proportion to the amounts actually paid.
