ABU DHABI, 19th October 2022 (WAM) — A Mercer Institute report focused on measuring global pension indicators revealed that the UAE is ranked 25th in its annual study, which included 44 global pension systems, equivalent to 65 percent of the world’s population.
The report monitored relevant indicators regarding retirement income systems around the world, and highlighted several proposals that could contribute to providing more adequate and sustainable retirement benefits to the residents of these countries.
Hanan Al Sahlawi, Executive Director of the Pensions Sector at the General Pension and Social Security Authority (GPSSA), said, “The UAE’s 25th position according to the 14th annual Mercer CFA Institute Global Pension Index (MCGPI) report reflects the government’s ongoing efforts to develop the pension system in the UAE, and reflects the distinguished performance shown by operating pension funds, whether at the organisational, operational or investment level.”
Al Sahlawi said that the UAE occupied the 25th place globally due to the income system in place for pensioners, which is a significantly advanced rank in light of the UAE’s competition for pension funds that are distinguished by experience and tradition compared to the age of other funds in countries such as the United States of America, Singapore and France.
She pointed out that the report showed an improvement in the value of the overall index for the UAE from 59.6 in 2021 to 61.8 in the current year, as it jumped in its classification from C to C+ and the UAE scored 63.8 degrees to rank 27th globally in terms of efficiency, which demonstrates the immense support provided by the UAE government for its UAE nationals employed in both governmental and private sectors; this is shown through providing the largest contribution percentage due from an insured individual which amounts to 15 percent, charging the employee only 5 percent in addition to supporting employees working in the private sector with a 2.5 percent contribution in order to encourage Emiratis to work in the private sector. The value of government contributions during the past year for UAE nationals amounted to AED87 million.
The minimum pension for those covered by the UAE Federal Pension Law increased from AED6,000 in 2006 to AED10,000 in 2012. The pension lasts for approximately 70 years or more, considering the high life expectancy in the UAE for both males and females, in addition to providing many other advantages enjoyed by those covered by the law.
At the level of financial sustainability, added Al Sahlawi, pension funds in the UAE have achieved high results. “This leap comes due to the continuous support provided by the government for those funds, in addition to the efficient investment policies put into place.
“At the level of the GPSSA, good investment policies contributed to enhancing its investment capital, and this was made possible through formulating and effective investment map that included numerous measures such as ensuring the independence of the investment sector and granting it the powers sufficient to enable members to take sound strategic decisions that ensured competence, distribution and diversification of financial resources, as well as access to vital financial markets, investment in global portfolios, entry into emerging markets, and effective investment policies, all steps that helped contribute to enhancing resources and providing higher investment rates,” she added.
Since the obligations of the social insurance system varies between long-term and short-term obligations, the UAE Pension Authority has worked towards maximising the profit resulting from managing GPSSA’s investment funds by diversifying investment operations to ensure that the fund continues to perform its services towards the beneficiaries in an optimal manner, taking into account sufficient guarantees to avoid potential risks in the market, and to secure sufficient cash liquidity to meet immediate obligations towards those covered by the social insurance system.
The UAE was awarded a score of 51.9 in terms of integrity, ranking 25th globally. The global governance was based on four basic pillars that were adhered to through strict regulations including: responsibility, accountability, transparency and justice.
The UAE is considered one of the most important countries that occupy advanced ranks in terms of establishing transparent systems in all its government institutions and does not tolerate any practices that are related to semi-corruption through the establishment of stringent laws and regulations with the support of an auditing bureau that helps monitor all financial activities in the public sector. Additionally, the GPSSA is committed to abiding and cooperating with the monitoring and auditing systems in place.
The authority continuously seeks to abide to its responsibilities towards the groups benefiting from its services and to fulfil these obligations at specified times, as well as abides by all disclosures that may be requested from the competent official authorities, and is constantly keen to publish all financial statements related to exchange or revenue operations, or submitting reports concerning the investment operations of the competent authorities, as well as treating all its shareholders and participants equally through a balanced and sensible system that achieves security and social protection for all those concerned.