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Mon 17 Dec 2007 10:00 AM

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Abu Dhabi hikes pensions 70%

Increase in benefits aimed at combating inflation, follows identical rise in UAE public sector pay.

Abu Dhabi is to increase state pensions by 70% in the latest attempt by the government to reduce the financial burden on its citizens caused by soaring inflation in the UAE, state news agency Wam has reported.

Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE and Ruler of Abu Dhabi, on Sunday issued a decree ordering the rise, a move that follows an identical increase in UAE public sector pay.

Under the decree, those who draw their pensions from the Abu Dhabi Retirement Pensions and Benefits Fund will be entitled to the increase, which has been capped at 6,000 dirhams ($1,634).

According to the decree, the Abu Dhabi government will fund the increase.

The UAE last month announced a 70% pay hike for federal government employees from January 1 following approval a 39.4 billion-dirham federal budget for 2008, the biggest in UAE history.

The increases are part of the UAE's efforts to combat soaring inflation, which hit a 19-year high of 9.3% last year and is expected to top 10% this year.

However, the increases have come in for criticism for actually driving up costs further, with some stores hiking prices following the announcement despite government warnings not to raise prices beyond “reasonable” levels.

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