UAE Pension Scheme for Expats: Everything You Should Know

We know you are here for the UAE Pension Scheme for Expats. Truth be told, UAE doesn’t offer any pension facility for outsiders. Only UAE citizens are allowed to have access to pension funds. One reason it has lowest tax rates on consumer products.

No Expat Pension System in UAE

There is no expat pension system in the UAE unless you’re an Emirati citizen. There are no tax-efficient private superannuation schemes because there is no income tax.

If you plan to leave the UAE in the future, you should save for your pensions confidentially to prevent unnecessary pension fund admin costs and taxation at the pay-out level. If you can’t invest on your own, you can use a conventional investment fund instead of a superannuation fund. In the United Arab Emirates, there are no pension plans for expatriates.

Nevertheless, this should be acknowledged that UAE labor law mandates that employers offer End of Service Benefits (EOSB). It may or may not motivate them to provide secret pension plans rather than a lump sum payment.

Besides these problems, the main pension concerns for expats in the UAE are related to their existing policies in their home country. If you don’t wish to remain in the UAE, keeping your foreign pension provisions is the most reasonable solution, but it’s wise to avoid making contributions to the economy to an abroad pension scheme while you’re there.

Emirates UAE Pension Scheme on Global Scale

Pension schemes have usually been enacted in countries with an income tax system, making superannuation game plans tax-efficient products. As a result, they are highly restricted to prevent erosion of the tax base.

  • Capital appreciation within a retirement fund is customarily tax-free or low-taxed, and:
  • Charitable donations are tax-deductible, but payouts (or a portion of them) are taxable, or charitable donations must always be made after-tax income, but payments are not subject to tax in the country where they were decided to make (but they could be taxed by another country if you retire in that other country)

The recently departed may (or may not) allow for international tax planning, especially if the UAE pension scheme has a tax treaty with countries in question, as taxation agreements generally give the country of domicile exclusive and right to tax pension payments. On the other hand, if you are worldwide portable, the latter poses a significant risk of double taxes.

Because the UAE has no taxable income, it can play an important role in global tax planning. As a consequence, although if your income was earned before becoming a UAE resident, users can take into account postponing the taxable event till once you is a UAE resident. In terms of pensions, it is conceivably fair to claim tax relief in a country where you worked briefly (through tax-deductible donations to a qualification private pension made while you were employed there) and then relocate to the UAE to assert your pension payments.

However, keep in mind that this foreign tax planning scheme will only work if your home country tolerates it, which should not be considered the norm. Despite this, a cross-border superannuation strategic plan is always a good idea. It is strongly advised that you seek expert guidance on this issue. 

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