The UAE Pensions Authority issues a decision regarding end-of-service benefits
According to the General Authority for pensions and Social Insurance, there are three primary processes involved in the process of calculating pensions and end-of-service remuneration for insured persons in the private sectors who are registered with it in accordance with the federal law on pensions and social insurance, This is done in line with the provisions of the law.
The authority explained that the first step in the calculation method is to determine the salary of the employee's contribution account, and this salary in the government sector consists of the sum of five elements, including the Basic plus bonuses and monthly allowances set by the pension law with the cost of living allowance, children's allowance, citizen's social allowance and housing allowance, and a maximum of 300,000 thousand dirhams, while in the private sector it is a maximum of 300,000 thousand dirhams.
How to calculate the average salary of the subscription account for employees in the government sector
it pointed out that once the salary of the subscription account is known, the average salary of the subscription account is then extracted, The average salary of the subscription account is calculated for employees in the government sector on the basis of their most recent three years of work, or the entire subscription period if the length of Service is less than that, The average salary of the subscription account is calculated for employees in the private sector on the basis of their most recent five years of work, or the entire subscription period if you say so.
After multiplying the salary of the subscription account for each of the most recent three or five years of service by 12 months, depending on the type of sector, the average salary of the subscription account is calculated, This is accomplished by collecting all of the aforementioned amounts, dividing them by either 36 months or 60 months, depending on whether the employee worked for the government or the private sector, and then taking the mean of these two numbers, The average salary of the subscription account is the end result of this process.
How to calculate the retirement account salary or bonus
The third and final step is to calculate the salary of the pension account or the bonus, and it should be noted that the pension is calculated based on the average salary of the contribution account according to the years of service, where the service period of 20 years grants the pension to the insured at 70% of the average salary of his contribution account, and the insured is granted an increase of 2% for each year over 20 years, noting that there are some cases in which the pension is calculated based on the average salary of the contribution account rather than the service.
Let's assume that the preceding information is accurate and that an employee has been with the company for a total of 20 years, with an average income of 22,166 dirhams in their contribution account.It has been determined that the salary of his pension account that he would receive after retirement will be 70% of the average salary of his contribution account according to his years of service, Therefore, (22,166 70%) is multiplied, which means that his pension will be anticipated to be 15,516.2 dirhams.
How to calculate end-of-service benefits for employees
The average salary of the Bonus Account is used in the calculation of the end-of-service bonus for employees in the government and private sectors, This average salary is the same as the average salary of the Contribution Account that was used to determine the pension amount, The insured is entitled to the bonus by one and a half months salary for each of the first five years of service from the average salary of the Bonus Account, by two months for each of the first ten years of service from the average salary of the Bonus Account, and by three months for.
