How UAE Employers Calculate Pension Contributions, Why Mid-Year Raise May Not Change It

The General Pension and Social Security Authority (GPSSA) has outlined the rules governing monthly pension contribution calculations for employers in both the government and private sectors.

For government sector employees, contributions are calculated each month based on the employee's actual salary for that month. Any salary change takes immediate effect on the contribution amount. For example, if a government employee earns Dh20,000 from January to March and receives a rise to Dh22,000 in April, the contribution reflects each salary from the month it applies.

Private sector employers follow a different rule. Contributions are based on the salary approved in January and remain fixed for the full calendar year, regardless of any mid-year increases. If a private sector employee earns Dh15,000 in January and receives a rise to Dh17,000 in July, contributions continue to be calculated on Dh15,000 until December. The updated salary only becomes the contribution basis from January of the following year.

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An exception applies when a salary increase is approved retroactively from January of the same year, in which case contributions may be recalculated for earlier months.

The authority urged employers to maintain accurate salary data through the Ma'ashi digital platform in line with the procedures applicable to each sector.

Contributions are due at the end of the relevant month and must be paid by the 15th of the following month. Late payments attract additional charges as prescribed by law.

GPSSA also noted that contributions are payable for all service periods completed by UAE nationals subject to pension law, regardless of duration, and form part of each employee's social insurance record.

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