UAE Pension Scheme for Expats: A Complete Guide

With the right strategy, you can take advantage of local and international pension options, optimise tax efficiency, and build a retirement plan that offers both flexibility and control. This guide explores the key options available and how to make them work for you.

Pension Options for Expats in the UAE

In the UAE, expats cannot rely on employer-mandated pensions as those are only accessible to UAE nationals. Instead, when they stop working, they receive financial support in the form of an end-of-service gratuity payment.

According to the UAE Labour Law, expats are eligible for gratuity after being employed by a private-sector company for one continuous year. A contract must also exist between them and the employer.

If the employee is dismissed for any of the reasons listed in Article 120 of the Labour Law, they will not be entitled to any gratuity benefits.

Gratuity is given in the form of a lump sum that is calculated based on your basic salary and tenure. It is accrued at the rate of:

• 21 days’ worth of pay per year for the first five years of service
• 30 days’ worth of pay per year for every subsequent year

Keep in mind that gratuity benefits have an upper limit—the amount you receive cannot be higher than your total two-year salary. While this sum is a valuable starting point, it may not be enough to support you throughout your entire retirement if you don’t have additional income sources.

To address this gap, you can explore structured alternatives that provide greater stability and flexibility. The four main options are:

1. Golden Pension plan
2. Voluntary pension schemes
3. Workplace Savings Plan—DEWS
4. International pension schemes

Golden Pension Plan

The Golden Pension Plan (GPP) is a voluntary savings programme targeted towards expatriates in the UAE who are employed in the private sector. Introduced by National Bonds in 2022, it was designed to supplement or replace the traditional gratuity benefits, depending on the employer.

Employers would deposit the mandatory gratuity into the plan, which allows for greater transparency and easier financial management. They can also contribute more than what is required, further supporting their employees.

Voluntary contributions from employees are possible, too, and they can be adjusted as long as they are above the minimum of AED 100. Additionally, enrolling in this plan allows employees to participate in the NBC AED 35 million Rewards Program, which includes valuable prizes such as cars and iPhones.

The money from the plan is invested in bank deposits, sukuks (financial products that comply with Sharia law), and the company’s real estate options. Employees can track their investments, but they can’t redeem their profits without the employer’s approval—they can only withdraw their individual contributions.

Voluntary Pension Schemes

Private employers can submit a request to the Ministry of Human Resources and Emiratisation (MoHRE) and set up a voluntary pension as a more structured approach to retirement savings for their employees. Voluntary pension schemes are typically overseen by licensed fund managers approved by the MoHRE and the Securities and Commodities Authority (SCA).

The employers’ tasks include:

• Managing subscriptions for the workers they wish to register
• Discontinuing any previous gratuity systems the members used
• Deciding on the category of employees for the scheme
• Defining and paying the basic subscription fee for the employees

Employees can transfer a percentage of their basic salary to the plan and make additional contributions if they wish to do so—as long as their contributions are less than 25% of the total annual earnings. Upon changing jobs, they can either transfer the accumulated benefits to a new plan or keep them in the account.

Voluntary schemes allow full or partial withdrawals of contributions and investment profits, according to the terms set by the plan manager. There’s also no minimum salary requirement, which ensures inclusive participation.

Depending on the specific schemes, voluntary participation is also accessible to self-employed individuals, those with freelance work permits, non-citizen employees in government entities or their affiliated establishments, and UAE nationals in both government and private sectors.

Workplace Savings Plan—DEWS

DEWS (DIFC Employee Workplace Savings Plan) is one of the most notable savings plans in the UAE, and it’s available to expatriate employees working in the Dubai International Financial Centre (DIFC). While the contribution amounts are voluntary for the employees, participation is mandatory for those who are eligible as the plan is structured to replace the traditional gratuity system.

Employers must contribute a monthly amount that equals:

• 5.83% of the monthly salary for employees who have been in the company for 5 years or less
• 8.33% of the monthly salary for employees who have been in the company for 6+ years

Similarly to the GPP, the benefits are invested in Sharia-compliant financial instruments, and the members can more effectively monitor their benefits. While they don’t have to contribute anything to the plan, employees do have to pay a yearly 1.26–1.33% fee, depending on the chosen investment fund. This fee is built into the price of the asset and not deducted from the savings plan itself.

International Pension Schemes

Beyond UAE-based pension schemes, UK expats can also consider offshore options that would allow them to transfer their UK pension and make contributions in multiple currencies while remaining compliant with all tax-related rules and regulations. Three of the main offshore plans are:

The right choice depends on your current financial situation and retirement goals. Experienced financial advisors, like those from Titan Wealth International, can help you evaluate your pension options and explain how you can integrate them with UAE-specific benefits.

Taxation of Pensions

Navigating tax obligations is essential for UK expats residing in the UAE. The 2016 UK-UAE Double Taxation Agreement (DTA) clarifies taxation matters, ensuring individuals are not taxed twice on the same type of income. By leveraging the DTA’s provisions, expats can protect their financial interests and simplify income management.

To qualify for DTA benefits, UK expats must obtain a Tax Residency Certificate (TRC) from the UAE Ministry of Finance, confirming that they meet one of the following conditions:

1. Their main place of residence and centre of personal and financial interests is in the UAE.
2. They’ve lived in the UAE for 90+ days during a consecutive 12-month period. They are a resident or citizen of the UAE or a national of the Gulf Cooperation Council (GCC). They also have a business in the UAE or a permanent place of residence.
3. They’ve lived in the UAE for at least 183 days during a consecutive 12-month period.

The UK-UAE DTA provides UK expats with clear guidelines regarding pension taxation. The UK relinquishes its right to tax pension income paid to UAE residents, placing the taxing right solely with the UAE. As the UAE doesn’t tax personal income, residents don’t pay any taxes on their pension benefits. This also means that you can withdraw your UK pension in the UAE tax-free.

Keep in mind that some UK public sector schemes, like the National Health Service (NHS) Pension, are always taxable in the UK. UK-sourced income, such as rental income or dividends, also remains taxable in the UK and must be reported to HMRC.

Additionally, if you return to the UK within five full tax years, you may face UK tax liabilities on certain income received while abroad, including pension withdrawals.