United Arab Emirates: Proposed reform to retirement and pension law

The Federal National Council (FNC) has called for widespread reform to retirement and pension laws in an effort to encourage more Emiratis to work in the private sector.

The FNC’s proposed changes to the pension system include:

• permitting Emirati owners of small or medium enterprises to register with the Pensions and Social Welfare Authority, making them eligible for state pensions;
• allowing retired Emiratis to gain new employment while collecting a state pension;
• removing the requirement that women be 50 before being able to retire and reinstating the previous condition that a woman works for 20 years prior to retirement; and
• aligning annual pension increases with inflation.

It is unclear just how many of these proposals will become law in the near future. Cabinet Ministers expressed their opposition to a lower retirement age just last year and recent press reports suggest that calls for pensions to be linked to inflation have fallen on deaf ears.

Actions for employers

Employers should keep abreast of developments and ensure they are positioned to take advantage of increased Emirati interest in the private sector in the future. Those with large Emirati workforces should anticipate the impact reforms may have on their recruitment and remuneration plans.

Article written by Stuart Paterson, Partner.