Employers to be fined for failing to contribute to pension fund

The General Pension and Social Security Authority (GPSSA) is urging private sector employers to register their national employees within one month of hiring.

A GPSSA circular published in a newspaper on Wednesday says:  “GPSSA is issuing this notice to bring to the attention of all employees in the private sector that, under Federal Law No. 7 of 1999 (Pension Law), employers are required to register their UAE national employees within one month from their date of joining date, after which contributions must be deducted and paid to GPSSA.”

“Failure to register the employees and pay the contributions on the due dates renders the employers liable to fines as stipulated by the Pension Law,” the circular said.

UAE nationals are entitled to a pension after 20 years of work. In order to provide the pension, the GPSSA requires the employer and the employee to contribute monthly payments of 12.5 per cent and five per cent respectively of the employee’s salary.

While the majority of big companies have registered their employees, a small percentage of them and some medium and small fail have failed to do so and so they do not contribute to the pension fund, said a GPSSA official when contacted by this website.

“Medium and small companies are sometimes not aware of this requirement. The circular is aimed at informing employers of their duty and employees of their rights,” the official said.

Employers that fail to register will be fined 0.1 per cent of the salary for every missed month, starting from the second month of the employee joining the company. The employer and employee will also be required to pay the regular contributions for the missed months.
 

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