The United Arab Emirates are a federation of seven territories: like many other aspects, social security in the UAE is regulated by federal law. Unless there is a specific framework, such as in Abu Dhabi or Dubai, social security in the UAE is based on the Federal Labor Law of 1986 and especially the Pension and Social Security Federal Law of 1999. The General Authority for Pensions and Social Security was created to implement that law.
Labor laws mostly cover working conditions in the UAE, only touching upon social security in the UAE as they refer to related benefits for employees as well. Employee benefits — such as paid maternity leave or workers’ compensation — may also differ in the UAE’s free zones, provided the conditions are not less favorable than the Federal Labor Law. The Dubai Financial International Centre, for example, has its own employment law, whose policies are more generous than federal regulations.
Local regulations for specific emirates can also supersede federal laws for social security in the UAE. For the sizable expat population, though, it is essential to know that retirement pensions and other provisions (such as financial support for widows and orphans) are generally reserved for Emirati citizens. Expats can partly compensate with private insurance plans tied to their current employment.
The most important part of social security in the UAE is the old-age pension for retired workers and employees. Upon reaching the official retirement age (usually 60 years for Emiratis), they are entitled to a pension: based on their average salary during the last few years of employment and the number of years they have paid contributions for.
Payments for social security in the UAE are usually deducted from gross earnings on a PAYE (pay-as-you-earn) basis. The employer, as well as the government, also contributes a certain percentage of the insured person’s salary to social security.
The retirement age, the share of the employer’s vs. the employee’s contributions, and the precise method for calculating the final retirement pension may differ slightly throughout the UAE. Abu Dhabi in particular has introduced the Abu Dhabi Pensions & Benefits Retirement Fund. Its social security regulations are not quite the same as those mandated in federal law.
Again, it is important to note whom this framework for social security in the UAE excludes. The pension funds only extend to UAE nationals in dependent employment. Business owners, freelancers, and self-employed professionals are not included, regardless of nationality. Furthermore, no foreign nationals — no matter what they do for a living — are covered by public pension plans.
As social security coverage generally doesn’t extend to expats living and working in the UAE, what are they to do? The good news is that, according to UAE law, foreign employees are entitled to a lump-sum end-of-service payment once they have finished their job.
The exact amount depends on the number of years they have been working for this company, as well as varying provisions in federal vs. local law. In Abu Dhabi, for instance, the end-of-service benefit paid to an expat employee after five years with their current employer is one and a half monthly salaries for each year, i.e. 7.5 times their basic salary.
In addition to the end-of-service benefit, many employers in the UAE offer private pension schemes to their expat workforce. This is by no means mandatory, but plenty of companies want to improve the working conditions for expatriates and give themselves an advantage in recruiting.
Generally, both employer and employee contribute about 5% of a full-time salary to such occupational pension schemes. The primary purpose is to accumulate funds for the employee’s retirement. They will be paid in cash when the employee retires or leaves the company. However, if a contract is terminated early, the employee may only be able to retrieve their own contributions, but may lose those made by their employer.
If you are planning to work in the UAE, please get professional advice concerning your future finances first. Sometimes, you might be able to keep contributing to both national pension schemes and private retirement plans in your home country. In other cases, this won’t be possible. Then you should find a way of putting aside roughly the same amount of money and contributing to a different pension scheme while living in Abu Dhabi or Dubai.
The fact that the UAE doesn’t levy any income tax might help you earmark part of your budget for that purpose. Moreover, always check your UAE employer’s company pension plan very carefully — sometimes, you could be able to re-negotiate and get better conditions for your retirement funding.
When it comes to public health insurance in the UAE, both Emirati nationals and citizens of other GCC member states enjoy free access to public hospitals and clinics. Again, this coverage does not include any other foreign nationals. Expats should make sure to take out health insurance when moving to the UAE.
Abu Dhabi and Dubai, however, have introduced compulsory health insurance schemes for all expats working there. Their local employer has to offer them a private insurance package for the duration of their job. This law has been in effect in Abu Dhabi since 2007, and similar measures are being rolled out in Dubai, to be finalized in the course of 2016.
Nonetheless, you should keep a few things in mind: Firstly, these benefits mostly cover the employee only. Dependent family members are not necessarily included, though some companies may offer it as an additional incentive. Secondly, these insurance schemes often provide for a basic standard of medical care. It’s strongly recommended to read the small print, so you can either re-negotiate or pay for top-up insurance from your own pocket.
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