UAE End of Service Pension Scheme

End of Service payments for UAE employees can soon be subject to a different scheme.  Or rather an alternative scheme.

In fact, that is exactly how it is called – an Alternative End of Service Scheme.

In brief, as per this new Scheme, Employers or Companies will soon have the option to deposit, on a monthly basis, employees’ statutory End of Service payments into a specialized Investment Fund. 

At a high level, for employees who have been with the company for up to 5 years, the company will contribute 5.83% of the employee’s monthly basis salary, into the Fund.

For the employees with the tenure of more than 5 years, the percentage will be 8.33% of their monthly basic salary.  

Notably, these percentages match the current 21 days or 30 days of basic salary, for every year of service, under the traditional End of Service Scheme.  

Importantly, these contributions are to be paid by the company, and not to be deducted from employee’s salaries.

This is called the Mandatory Contribution, under this new Alternative End of Service Scheme.

And this new Scheme has been introduced recently, by virtue of the UAE Cabinet Decision No. 96 of 2023, re: the Optional Alternative Scheme for the End of Service System. Which came into effect in October 2023.