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The UAE’s General Pension and Social Security Authority (GPSSA) has said that businesses and other entities are liable to pay fines for violating the conditions set out in the new pension law.
In a statement issued on Tuesday, the federal authority stressed that the Decree Law (57) of 2023 requires UAE-based entities in the private and government sectors to register insured Emirati employees within one month from their joining date.
Entities are also required to provide the GPSSA with names of employees whose service ends within 15 days at the most from their end-of-service date.
“Violating the [said] conditions result in the entity paying a AED200 ($54) fine for each day delayed and for each insured employee whose registration process has not been completed,” the authority said.
The federal authority has the mandate to apply pension and retirement benefits for UAE nationals.
On October 2, 2023, the new pension law was published and came into effect.
The decree is the most significant change to the UAE’s pensions landscape since the issuance of UAE Federal Law No. 7 of 1999 as amended, according to PricewaterhouseCoopers (PwC).
Pension scheme
Individuals who qualify for the pension and social security scheme are UAE citizens who are at least 18 years old.
The amount of contribution is calculated based on the worker’s full compensation, including bonuses or commission.
The total contribution is 28.5%, with the employer paying 15%, employee 11% and the government 2.5%, according to a brief from Al Tamimi & Co.
Employers are obliged to pay contributions on time on the “first of the month following the month by which they are due,” the GPSSA said.
If payments are delayed, the entity will be obliged to pay an additional amount of 0.1% of the due contributions for each day delayed, without the need to send a notice or warning.
“Employers are obligated to pay the contributions on real salaries, otherwise, the UAE Pension Law requires insured individuals, in the event of a violation to this regulation, to pay an additional amount of 10% of the value of contributions due without the need to send a prior warning or notification.”
(Writing by Cleofe Maceda; editing by Seban Scaria)
