UAE firms face fines and prison if they don’t pay pension contributions

The General Pension and Social Security Authority (GPSSA) announced that charging an insured person with a percentage greater than the due contribution, or failing to pay expenses results in a fine of AED5,000 for each insured person.

A court ruling is immediately taken to oblige entities to return excess amounts to their insured employees.

UAE pension rules

“Employers are fined for every Emirati employee not registered with the GPSSA and bear the responsibility of contributing on his/her behalf retroactively and paying the due contributions as per the employee’s start date,” the GPSSA said in a statement.

According to the pension and social security federal law, salary contributions are due at the beginning of each month and may be extended until the 15th.

The provisions of Article 13 of the law state that monthly pension contributions are not refundable.

Therefore, any delay in paying contributions beyond the specified dates results in mandating the company/entity owner to pay an additional amount at the rate of 0.1 percent of the contributions due for each delayed day and without the need to send a warning, as per the provisions of Article 14.

An additional 10 percent is charged from the value of due contributions on entities that pay contribution amounts based on an incorrect salary to avoid paying contributions at a higher rate or to those who fail to pay due contributions for some or all of their employees.

Employers risk imprisonment and a fine of not more than AED5,000 for each employee if the entity sends incorrect data or refrains from providing information on all practices that are considered illegal.

The UAE has ranked globally, due to the nation’s efforts to improve the retirement system, according to Mercer CFA Institute Global Pension Index.

The index focuses on pension systems worldwide, which accounts for 65 percent of the global population.

The UAE has performed well in areas of adequacy, sustainability and integrity, the report showed. The UAE’s ranking accounts for the progress being made for Emiratis in the public and private sectors.