Abu Dhabi: The General Pension and Social Security Authority (GPSSA) has announced that insured Emiratis who aim to secure a favorable pension rate and retire early can opt to purchase inactive service years alongside their actual employment period, in line with federal pension regulations.
According to Emirates News Agency, GPSSA's 'Purchase of Service Years' service varies across different federal laws. Federal Law No. 7 of 1999 concerning pension and social security mandates that the insured must have completed 20 years of employment in an organization. Meanwhile, Federal Law No. 57 of 2023, applicable to individuals joining employers for the first time after October 31, 2023, requires the insured to have at least 25 years of actual service when filing the purchase request, or 15 years if they have reached 60 years of age.
Under the provisions of Federal Law No. 7 of 1999, males are eligible to purchase up to five additional service years, while females can purchase up to ten. However, Federal Law No. 57 of 2023 standardizes this by capping the purchase period at five years for all genders.
The increment granted by each purchased service year differs based on the pension laws enforced by the GPSSA. Under Federal Law No. 7 of 1999, a purchased year grants a male or female an increase of 2 percent, whereas, for those with a contribution period between 25 to 30 years, the increase is 2.67 percent.
In contrast, Federal Law No. 57 of 2023 outlines a pension calculation scheme where the insured receive 4 percent for each year worked beyond 30 years. Despite varying requirements for the purchase of service years, the maximum service period qualifying for the highest pension remains capped at 35 years.
The cost for purchasing service years is determined by the contribution account salary at the time of the request, multiplied by 20 percent (for Federal Law No. 7 of 1999) or 26 percent (for Federal Law No. 57 of 2023), and further multiplied by the number of months to be purchased.
For instance, under Federal Law No. 7 of 1999, if an insured individual earns AED20,000 and seeks to purchase five years, the cost amounts to AED240,000. Under Federal Law No. 57 of 2023, using the same salary, the cost for five years would be AED312,000.
To qualify for purchasing service years, the insured must be currently employed. If the service period concludes before the complete purchase cost is paid, the purchased years are adjusted according to the amount paid. Should the insured pass away before completing payment, their heirs are responsible for continuing the instalments.