How UAE pension contributions work in payroll
Reviewed by Mellow Editorial Team, HR & payroll content team
UAE pension contributions apply only to UAE and other GCC national employees. Expatriate employees — the majority of most UAE workforces — are not enrolled in any state pension scheme and instead accrue end-of-service gratuity when they leave.
Who is covered
The General Pension and Social Security Authority (GPSSA) administers the federal pension scheme for UAE nationals and, in most cases, nationals of other GCC states working in the UAE private sector. Each GCC country has its own pension body, and contributions for those nationals are generally remitted to their home country's authority, but the mechanics from the employer's side are similar.
Employees who are not UAE or GCC nationals — the large majority in most private-sector businesses — fall outside this system entirely. Their statutory entitlement on leaving is an end-of-service gratuity calculated on basic wage, not pension contributions.
How GPSSA contributions are structured
GPSSA operates on a defined-contribution model where both the employer and the employee pay a percentage of the employee's salary into the scheme each month. The contribution is calculated on the insurable salary, which is the employee's basic wage plus certain allowances as defined by GPSSA — not always the full package.
Both rates are set by GPSSA and are reviewed periodically. Because Mellow's verified figures do not include the current statutory percentages, you should confirm the exact rates directly with GPSSA or your registered PRO before running payroll. What is fixed by law is that both an employer share and an employee share are due, the employer deducts the employee share from the monthly salary, and the combined amount is remitted to GPSSA by the employer.
Registering as an employer with GPSSA
Before you can process pension contributions, you need to register the company with GPSSA. You do this through the GPSSA online portal. The steps in practice are:
1. Create an employer account on the GPSSA portal.
2. Submit the required company documents (trade licence, establishment card, authorised signatory details).
3. Register each eligible employee individually once they join, providing their Emirates ID, date of joining and insurable salary details.
4. GPSSA confirms registration and assigns an employer account number.
Registration should happen promptly when you hire a UAE or GCC national, not retrospectively at year end. Late registration can trigger back contributions and administrative penalties.
Running the monthly contribution in payroll
Each month the payroll process for a UAE or GCC national employee follows this sequence:
- Calculate the insurable salary for that employee as recognised by GPSSA.
- Apply the employee contribution rate to arrive at the employee deduction.
- Apply the employer contribution rate to arrive at the employer cost.
- Deduct the employee share from gross pay before the net salary is transferred.
- Transfer the net salary through the Wage Protection System (WPS), as required for all employees in the UAE regardless of nationality.
- Remit the total contribution (employee share plus employer share) to GPSSA separately, by the deadline GPSSA specifies for that month.
The WPS transfer and the GPSSA remittance are two distinct payments to two separate bodies. Mixing them up or omitting the GPSSA remittance is a common administrative error, particularly for businesses that hire their first UAE national after operating for some time with an all-expatriate workforce.
What this means alongside end-of-service gratuity
Expatriate employees do not receive pension contributions — they receive end-of-service gratuity instead. Under Federal Decree-Law No. 33/2021, the gratuity calculation is 21 days' basic wage per completed year of service for the first five years, and 30 days' basic wage per year thereafter, capped in total at two years' pay. Gratuity is paid at the end of the employment relationship, not monthly.
UAE nationals enrolled in GPSSA are generally not entitled to the standard expatriate gratuity on top of their pension contributions — their retirement provision comes through the pension scheme. The practical implication for payroll is that you are running two parallel calculations depending on the employee's nationality: monthly pension contributions for UAE and GCC nationals, and an accruing gratuity liability for everyone else.
If you run a mixed-nationality team, your payroll setup needs to handle both tracks cleanly and separately. Miscategorising an employee — or failing to register a UAE national with GPSSA at the point of hire — creates a liability that compounds the longer it goes uncorrected. For employers managing payroll across multiple countries, how Mellow runs payroll across six countries on one platform covers how these different statutory frameworks can be handled without maintaining a separate process for each jurisdiction.
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