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The UAE's retirement system has seen enhancements in its adequacy, achieving a score of 77.1, which places it 12th globally in 2024, according to Reuters.
The UAE's retirement income system has continued to improve for the fourth consecutive year, as highlighted by a recent study. The 16th annual Mercer CFA Institute Global Pension Index (MCGPI) revealed that the UAE's index value rose from 62.5 in 2023 to 64.8 in 2024, largely due to the implementation of a minimum access age for benefit eligibility, announced in November 2023. Specifically, the UAE's retirement system saw improvements in adequacy, scoring 77.1 and ranking 12th globally in 2024, bolstered by the country's substantial retirement benefits. Additionally, the system's integrity score improved to 75.3 (25th globally), supported by a robust governance structure. Overall, the UAE ranks 23rd in the study, placing it in the same category as countries with well-established pension systems like the United States and alongside regional counterparts such as the Kingdom of Saudi Arabia.
The UAE's retirement income system includes a minimum means-tested state pension and an earnings-related national employment-based scheme managed by entities such as the Abu Dhabi Pension Fund, Sharjah Social Security Fund, and the General Pensions and Social Security Authority. Employees contribute 5% of their salary, while employers contribute 12.5%–15% of the salary, with government guarantees on benefits.
The report's authors suggest that the overall index value for the UAE's system could be further enhanced by expanding the coverage of occupational pension schemes, increasing contribution and asset levels, improving communication with pension scheme members, raising the state pension age in line with rising life expectancies, and reducing household debt levels.
Tarek Lotfy, President of Mercer India, Middle East, and Africa, commented, "The UAE is adopting a forward-looking approach to the sustainable development of its pension system, preparing for longer life expectancies and a growing number of retirees, which will require a well-managed and adequately funded national pension program."
Claudia Maldonado, Head of Savings and Pensions at Mercer Middle East, added, "The UAE has acknowledged the global shift from defined benefit (DB) plans to defined contribution (DC) arrangements and is taking appropriate steps to ensure the needs of future retirees are met by promoting flexibility and personalization."
Somshankar Bandyopadhyay, a News Editor with nearly three decades of experience, currently oversees the business section, ensuring that the day's top economic and business news reaches readers.
