Almost 89% of UAE’s population is expats, who come here to build careers. The country makes for way more than a backdrop for pretty Instagram photos. Dreams, ambitions, we could go on. But here comes the twist; sandcastles dissolve, and so do paychecks if you don’t plan for life after work. And no, UAE pension scheme isn’t a universal or uniform mirage. For expats and residents, it’s a mix of mandatory systems, end-of-service perks, and voluntary options. Turn your golden years into something shinier. We might have just the resource for that: this blog post!
Key Takeaways:
Here are the main points from today’s blog. You’re not alone if you’ve wondered:
- “Do I even qualify for a UAE pension?”
- “What’s the difference between a gratuity and a pension?”
- “How do I avoid retiring into a financial sand trap?”
We have the solutions for all those above points too.
- Expats can leverage their end-of-service benefits and voluntary savings plans.
- UAE nationals have a structured government-backed system.
- Both groups can boost retirement security with smart moves.
The Retirement Reality: What Happens When You Stop Working?
The idea of retirement sounds like a dream — until you start wondering how you’ll fund it. UAE’s pension scheme is as much about post-retirement income as it’s about financial security, peace of mind, and making sure you don’t end up relying solely on savings. Working in UAE? Understanding how the pension system works here is non-negotiable!
Many professionals relocate to the country for better career opportunities, tax-free salaries, and a high standard of living. Where retirement is concerned, most people hear the unspoken underlying question, “What happens next?”. Now, unlike some countries with universal pension schemes covering all residents, the UAE follows a structured system that primarily benefits Emirati citizens. For expats, this means planning ahead to secure their post-career life. (And looking up gratuity and end-of-service benefits provided by your employer.)
How the Pension Scheme in UAE Works:
UAE has a structured pension system primarily covering Emiratis. Whereas, expatriates have different retirement planning options. Here’s a snapshot of how the system operates:
- Who qualifies? UAE nationals employed in government and private sectors, contributing to the General Pension and Social Security Authority (GPSSA) or other emirate-specific pension bodies.
- Who doesn’t? Expatriates. They aren’t included in the UAE’s national pension scheme. Instead, they have got access to end-of-service gratuity and other savings plans.
- Employer & Employee Contributions: Employers contribute 15% of an employee’s salary, employees contribute 5%, and the government chips in with 2.5%. It’s the Federal Decree Law No. 5 of 2023 on Pension and Social Security that explains it far better with its implementation. The aim is to close any existing gaps in policies and services provided to UAE nationals employed in government and private sectors. It’s only applicable to Emirati employees who had joined the labour market for the first time ever on or after October 2023, at organizations that are a participant of GPSSA’s pension scheme.
On March 5th, 2o24, WAM reported what GPSSA (General Pension and Social Security Authority) has to say on the contribution salary account.
“As part of the “Know Your Law” awareness campaign, the authority said that the contribution amount as per Federal Law No.57 of 2023 regarding pension and social security is 26 percent, out of which insured Emiratis who have joined the workforce starting 31st October 2023 bear 11 percent, while the employer pays 15 percent; these contributions are paid according to the insured’s contribution account salary.”
This shows how the contribution amount is 26 percent with employers paying 15% and the government paying 2.5% of that (when an employee is earning less than AED 20,000!) while employees pay the remaining 11%.
MoHRE also issued a guideline for employers on monthly contributions. Check that out here. It highlights:
- The new contribution scheme
- Contribution account salary (in private and government sector)
- Payment of contribution due to GPSSA (by employers in government and private sectors)
- Additional amounts
- Pension Calculation: The final payout depends on salary, contributions, and length of service. Emiratis with longer service years receive higher monthly pension benefits.
Pension Scheme for UAE Nationals in Dubai
Dubai operates under the GPSSA, ensuring that UAE citizens working in government and private sectors receive a stable post-retirement income. Key aspects include:
- Mandatory Contributions: Salaries are deducted monthly to contribute to pension funds.
- Long-Term Benefits: Retired Emiratis receive their monthly pensions based on years of service and final salary calculations.
- Survivor Benefits: Dependents of a deceased contributor are eligible for financial support.
- Early Retirement Options: Emiratis can retire earlier if they meet certain service year requirements, though this may impact pension payouts.
Pension Scheme in UAE for Expats: What Are the Options?
As expats aren’t covered under the national pension scheme, their retirement options instead consist of:
- End-of-Service Gratuit
(Employees with at least one year of service receive their gratuity based on salary and tenure.) - Employer-Sponsored Retirement Plans
(Some companies offer voluntary savings plans for long-term employees.) - Private Pension Schemes
(Expats can opt for international pension plans or investment funds.) - National Bonds & Savings Accounts
(These provide structured ways to grow wealth for retirement.) - Real Estate Investments
(Many expats invest in UAE real estate to generate passive income during retirement.) - Retirement Visas & Financial Planning
(UAE now offers a retirement visa for expats who meet financial criteria, making proper savings planning even more important.)
Understanding End-of-Service Gratuity: Your Mini-Pension
Expats in the UAE receive an end-of-service gratuity, calculated based on:
- Years of service (21 days of basic salary per year for the first five years, 30 days per year thereafter).
- Final basic salary (housing and other allowances aren’t included).
- Total employment tenure (longer service equals higher payout).
- Limited vs. Unlimited Contracts: The structure of the employment contract affects gratuity entitlements. Expats with limited-term contracts typically receive higher payouts.
- Gratuity vs. Pension: Unlike pensions that provide continuous income post-retirement, gratuity is a lump sum paid at the end of employment.
Common Pension Concerns & Their Solutions
“What if I leave before retirement?”
For Emiratis, early withdrawals or transfers to other schemes are possible. Expats can cash out gratuity payments upon exiting the country. Some companies also offer pension transfer options to international schemes.
“Is my pension taxable?”
UAE has no income tax. So your pension payouts remain untouched. However, expats should check tax laws in their home countries. Some countries tax global income, which might impact pension benefits received from overseas.
“How can I maximize my retirement savings?”
Expats should diversify through international pension funds, real estate, or long-term savings plans. Employer-sponsored savings programs, stock investments, and offshore pension schemes can also provide additional financial security.
“Are there new reforms on pension schemes for expats?”
No national pension plans exist for expats yet. But there have been discussions surrounding mandatory employer-sponsored savings schemes in the future. Dubai International Financial Centre (DIFC) already requires employers to contribute to the DIFC Employee Workplace Savings (DEWS) plan, which could be a model for future UAE-wide policies.
Why Retirement Planning in the UAE Matters
Financial independence after retirement doesn’t happen by accident. It’s planned. Whether you’re a UAE national relying on a pension or an expat structuring your own plan, the key here is to start early.
- For Emiratis: Maximizing service years ensures better pension payouts.
- For Expats: A structured savings plan can replace the absence of a government pension.
- For Business Owners & Employers: Understanding pension obligations helps with compliance and talent retention.
How to Secure Your Retirement in the UAE
- Start Early: The sooner you plan, the more you can save.
- Diversify Investments: Relying solely on end-of-service benefits isn’t enough.
- Consider International Pension Plans: Look into private pension funds that allow global mobility.
- Stay Informed: Changes in policies can affect retirement benefits and planning strategies.
Final Thoughts
Understanding the pension scheme in UAE means securing a comfortable future. For Emiratis, it’s a well-structured plan; for expats, it requires strategic savings. Either way, retirement isn’t something to figure out ‘later’—it starts with the decisions you make today. The key is to plan ahead, explore all available options, and take control of your financial future before your working years come to an end.
Pension scheme in UAE is a starting line, not a finish line. Whether you are a national eyeing GPSSA perks or an expat considering EOSB and savings, the key is to act now.
Need a Tailored Plan?
We specialize in aligning Emiratisation strategies with financial security. Let’s turn your pension puzzle into a plan that works.
Explore our Emiratisation solutions or chat with our experts, future-proofing your retirement.