In the UAE, retirement policy is governed by a structured yet complex framework for both nationals and expatriates. Here, Emiratis benefit from government pensions under GPSSA. In contrast, expatriates depend on end-of-service gratuities or private and international plans.
Additionally, retirement visas and flexible workplace savings schemes provide further opportunities for the UAE employees. But compliance with retirement regulations can be complex. To support this process, HR and payroll software help employers and employees manage contributions and ensure full compliance with UAE retirement regulations.
What Is the Retirement Policy in UAE?
The United Arab Emirates does not have a single retirement system for all its employees. Instead, it has separate legal frameworks for UAE nationals, GCC nationals, and expatriate residents. Retirement in the UAE is governed by the General Pension and Social Security Authority (GPSSA) for Emiratis. Under this law, Emiratis become eligible to receive a retirement pension after they reach the government-defined retirement age and contribution/service period.
As for GCC citizens, they participate in pension schemes under their home country’s social security pension system. In contrast, expat workers are generally not entitled to a government pension under UAE law. Instead, they receive an end-of-service gratuity or lump-sum payment when their employment ends.
What Is the Official Retirement Age in the UAE?
There is no mandatory retirement age for employees under UAE labour law. However, GPSSA rules have set a standard retirement age for both male and female insured members at 60 years old. But expats and national employees can continue to work after 60 years of age.
The pension is entitled when they have at least 15 years of insured service. After that retirement pension increases by 2% yearly. It can reach a maximum pension of 100% of the contribution-account salary after completing 35 years of service. On top of that, they can also retire early if they want.
Is It Possible to Work Beyond the Retirement Age in the UAE?
Yes, employees in the UAE can continue even after reaching their retirement age. They can also extend their tenure for at least 65-70 years. UAE even allows its citizens to join another employer after retirement, as mentioned in ADRPBF. According to it, employees don’t have to retire after 25 years of work in the public, semi-public, and private sectors. Plus, they can also preserve their previous years of service and insurance rights.
Expatriate employees in the private and public sectors can also continue their work even after retirement. However, expats have to apply for a work permit to work after reaching their retirement age. Moreover, if they wish to retire in the country, they will need to apply for a retirement residence permit. It is also referred to as the retirement visa.
What Is the Early Retirement Rule in the UAE?
In the UAE, early retirement only applies to insured Emirati nationals under the General Pension and Social Security Authority (GPSSA). It follows the following rule.Â
- An Emirati man can be eligible for an early retirement pension at 55 years old if he has completed 20 years of insured service.Â
- An Emirati woman can retire early at 50 years old with 20 years of service.
Expatriates are not eligible for early retirement pensions. Instead, they receive an end-of-service gratuity. Early retirement allows insured nationals to receive pension benefits before the standard retirement age of 60. As for resignation, if an insured individual resigns before completing 20 years of service, they are only entitled to end-of-service gratuity, not a pension. But if they resign after completing 20 years of service, they can still receive a pension.
So, which is better between early retirement and resignation? It depends. Early retirement provides pension benefits if age and service requirements are met. In contrast, resignation without meeting these conditions only gives end-of-service gratuity.
What Are the Retirement Benefits in the UAE?
Retirement in the UAE provides financial security and many other benefits for both nationals and expatriates. Here they are.
- UAE nationals insured under GPSSA receive a monthly retirement pension after meeting age and service requirements.
- Expatriate employees receive a lump-sum end-of-service gratuity under UAE labour law.
- Longer service periods increase pension amounts. It can potentially reach 100% of the pension salary after 35 years of service.
- When the service period is longer, the extra service period is compensated by a salary of three months per additional year, in addition to the retirement pension.
- Pension or gratuity benefits are protected in cases of disability or death for insured individuals.
- Moreover, the beneficiaries receive the pension after the death of the pensioner, which is the death grant.
What Is the Pension System in the UAE?
In the UAE, citizens receive government pensions through GPSSA. On the other hand, expats rely on gratuity and GCC nationals’ contributions sent directly to the pension fund or authority of their home country. Here is an overview.Â
Pension Scheme for UAE Nationals
In the UAE, public and private sector entities must register their employees with GPSSSA from the first month of employment. Moreover, both employers and employees need to ensure monthly contributions. This contribution results in pension and retirement benefits, end-of-service gratuity, and compensation in work-related disability or death. It is mandatory under Federal Law No. 7 of 1999 on pensions and social security.Â
Pension Scheme for GCC Nationals
All GCC nationals who are working in the UAE need to be registered with GPSSA. However, the pension authority of their country generally handles their pension. Employers pay monthly contributions. But these contributions go directly to the employee’s local pension fund. It ensures their UAE work counts toward their retirement benefits at home, staying compliant with the UAE.Â
UAE Pension Scheme for Expats
Expatriates working in the UAE are not covered by a government pension. Instead, their retirement benefit comes from end-of-service gratuity. It is a lump-sum payment made by the employer upon employment termination. That is why there is no need for registration or contribution to any government pension fund.
What Are the Pension And Retirement Options Available in the UAE?
In the UAE, you can get several pension and retirement options. Whether you are nationals or expats, you can get flexible private and international plans.
Government Pension
It is a mandatory pension plan for UAE nationals. It provides long-term retirement income after more than 25 years of service.
- Eligibility: UAE nationals insured under GPSSA with a minimum service period of 25 years.Â
- Contribution rates: Total is 26% of the salary. Employee contribution is 11% of the subscription account salary, and employer contribution is 15% of the subscription account salary. Government bear 2.5% on behalf of UAE national employees.Â
- Flexibility: Contribution is mandatory.Â
- Portability: Pension continues after service ends.Â
- Tax considerations: No tax.
- Best for: UAE nationals.
End-of-Service Gratuity
End-of-Service Gratuity is a lump-sum payout for all employees after one year of service. It is especially beneficial for expats.
- Eligibility: All employees, including expats and nationals, after one year of service.
- Contribution rates: No contribution.Â
- Flexibility: It is paid once at the end of employment.Â
- Portability: It is paid directly to the individual and can be used abroad.
- Tax considerations: No tax.
- Best for: Expat workers.
Golden Pension Scheme UAE
Golden Pension Plan (GPP) is a new initiative by National Bonds. It allows companies to provide financial benefits to their employees.Â
- Eligibility: All expats employed in the UAE private sector.Â
- Contribution rates: Voluntary contributions of employees. However, it should be above the minimum of AED 100.Â
- Flexibility: Highly flexible.Â
- Portability: Expats can retain or move their savings upon resignation or retirement.Â
- Tax considerations: Tax-free.
- Best for: Expats looking for a flexible and Sharia-compliant retirement savings plan.
Workplace Savings Schemes
The DEWS (DIFC Employee Workplace Savings) plan is a new and regulated way. It allows employers to fund your end-of-service benefits.Â
- Eligibility: Employees of a participating company.
- Contribution rates: Employer contributes based on the employee’s salary. Employees can also contribute.Â
- Flexibility: It offers investment options and voluntary contributions.
- Portability: Savings are portable and can be transferred to the new employer’s fund.
- Tax considerations: No tax.
- Best for: Employees in companies that offer structured workplace savings schemes.
Voluntary And Private Pension Options
It is a flexible private plan for residents and expats. It largely relies on personal savings and offshore plans.
- Eligibility: Residents and expats.Â
- Contribution rates: Plan-based and voluntary.Â
- Flexibility: High.Â
- Portability: Yes.Â
- Tax considerations: None.
- Best for: Extra retirement savings.
International Pension Schemes
QROPS (Qualifying Recognised Overseas Pension Schemes) and International SIPPs (Self-Invested Personal Pension) are foreign pension plans. Expats can use it to move or continue their retirement savings abroad.
- Eligibility: Expats with foreign pension rights.Â
- Contribution rates: Plan-specific
- Flexibility: Investment options and withdrawals per plan.Â
- Portability: Cross-border portability.Â
- Tax considerations: Depends on the home country’s retirement tax rules.
- Best for: Expats who want to preserve or transfer retirement savings.
What Are the End-of-Service Gratuity And Final Settlement Rules for Retirement?
Under UAE Labour Law, if you complete at least one year of continuous service, you are entitled to an end-of-service gratuity when your employment ends. It does not matter if you resign, retire, or are terminated. Here end-of-service gratuity is calculated based on your last basic salary.
The final settlement includes unpaid basic salary, unused annual leave pay, end-of-service gratuity, and any contractual entitlements. The employer must pay all end-of-service benefits and your final settlement within 14 days from the end date of your contract or your last working day. In the UAE, even if you resign, UAE law ensures you are paid for any unused annual leave as part of your final settlement. This payment is calculated based on your basic salary for the days you have accrued but not taken.
Is Retirement Income Taxed in the UAE?
In the UAE, there is no tax on personal income. It also includes retirement income, including pensions, investment returns, and savings. That means the pension system in the UAE is tax-exempt within the UAE and not subject to income tax or other personal taxes under UAE law. That is also the same for end-of-service gratuity. It is also not subject to personal income tax.
Employees receive 100% of their gratuity amount without tax deductions. On top of that, The UAE has also signed a large number of Double Taxation Avoidance Agreements (DTAAs) with other countries. It helps prevent the same income from being taxed twice across jurisdictions.
However, the overseas tax you may owe after leaving the UAE depends on the tax rules of the country you move to. If that country taxes worldwide income, you may have to pay taxes on your retirement income or pension.
What Are the Rules for a Retirement Visa in the UAE?
In the UAE, a retirement visa is a special type of residence permit. It allows eligible expatriates to live in the country after retirement. You will be eligible for a retirement visa in the UAE if you meet the following criteria.
- You have worked for at least 15 years inside or outside the UAE.
- You are 55 years old or more at the time of retirement.
- You own a property or have saving not less than AED 1 million.
- You have a monthly income of AED 20,000. However, it differs between emirates. For instance, it is 15,000 a month for Dubai.
There are also requirements that you need to fulfill to apply for the retirement visa. To apply for the residency visa, you will need to provide:
- A statement issued by a bank showing a deposit of at least AED 1,000,000 or its equivalent in foreign currencies.
- A real estate unit value certificate issued by the Department of Municipalities and Transport (DMT) or any other competent authority.Â
- Bank statement proving your annual income of no less than AED 240,000 or its equivalent in other currencies.
The resident visa in the UAE is valid for five years. You can also renew it as long as you meet the eligibility criteria for a retirement visa. As for the cost of a residency visa, the visa carries set government fees. Here is an overview.
| Component | AED Range |
|---|---|
| Application Fee | AED 3,500 to 4,000 |
| Emirates ID | AED 370 to 500 |
| Medical Test | AED 300 to 500 |
| Health Insurance | AED 2,000 to 5,000 |
| Estimated Total | AED 6,000 to 9,000 |
What Happens When a Person Leaves the UAE After Retirement?
As for UAE nationals, resigning or retiring does not cancel pension rights. If you have completed the required service period, your pension starts after your service ends. Generally, UAE nationals get monthly lifetime payments under GPSSA. There is no government rule allowing a full one-time withdrawal of the pension fund. If you resign before reaching retirement age, you will get an end-of-service benefit.
Expatriates do not get a government pension. So they receive end-of-service gratuity after leaving the UAE after retirement. On top of that, UAE law does not require retirees to remain in the country to receive approved pension payments or gratuity.
How Can HR and Payroll Software Help with Retirement Policy Compliance in the UAE?
HR and payroll software help employers and employees stay compliant with the retirement policy in the UAE. It automatically calculates pensions and gratuity, tracks service years and leave payment, meeting the legal requirements.
On top of that, software updates ensure compliance with GPSSA and labour law changes. It reduces errors, avoids penalties, and saves time. As the system ensures centralized employee data, it makes audits easier. Overall, HR and payroll software help companies stay legally compliant by ensuring accurate payments and efficient record-keeping according to UAE laws.
