UAE Pension Scheme for Expats: How to Plan Your Retirement in the Emirates

At Hoxton Wealth, we’ve guided thousands of expats in structuring pensions and retirement savings across borders.

With offices in Dubai, and key global hubs, we specialise in expat challenges, from frozen UK pensions to UAE end-of-service benefits.  

Our clients include British nationals moving pensions abroad, US expats balancing 401(k)s, and Australians managing superannuation in the Gulf.  

When people talk about the “UAE pension scheme,” it’s important to distinguish between Emirati citizens and foreign workers. 

• For Emiratis and GCC nationals: Contributions are mandatory under the GPSSA, where employers and employees both pay into the fund. This provides retirement income, disability cover, and survivor benefits.
• For expats: No such system exists. Instead, foreign employees qualify for an end-of-service gratuity. 

The end-of-service gratuity is a lump sum paid by your employer when your contract ends, provided you’ve completed at least one year of continuous service. It is calculated based on your basic salary and years of service. 

• For the first five years: 21 days’ basic pay for each year of service.
• For more than five years: 30 days’ basic pay for each additional year.
• The maximum payout is capped at two years’ basic salary. 

For example: 

If you earn AED 20,000 per month and work for 10 years: 

• First 5 years: 21 days × 5 = 105 days (≈ 3.5 months of salary).
• Next 5 years: 30 days × 5 = 150 days (≈ 5 months of salary).
• Total gratuity = 8.5 months × AED 20,000 = AED 170,000. 

While significant, this lump sum is rarely enough to fund retirement, especially if you plan to stop working in your 50s or 60s. 

The UAE government has recognised this gap and introduced pilot retirement savings schemes, particularly in Dubai’s DIFC (Dubai International Financial Centre).

These funded workplace savings plans aim to replace gratuity with more structured, investment-based contributions.

Adoption is growing, but they are not yet universal.

Because gratuity alone is insufficient, expats often turn to: 

• Employer-provided savings schemes (common in multinationals).
• Private pensions and investment accounts set up locally or offshore.
• International SIPPs or QROPS for British expats wishing to consolidate UK pensions abroad. 

The key is portability, making sure your retirement funds move with you when you change jobs or relocate. 

1. Understand what you’re entitled to

Your entitlement as an expat in the UAE begins with the end-of-service gratuity; there is no GPSSA pension coverage. Here are key points:

• The gratuity is the official legal payment from your employer when your contract ends, provided you’ve completed at least one year of continuous service.
• Whether your “basic salary” includes allowances matters greatly. Often some contracts include housing, transport, or other allowances as part of total pay, but gratuity calculations use only the basic salary. That can make a big difference.

At this stage, you’ll want to pull together your employment contracts, talk to HR, and see exactly how your basic salary is defined. Hoxton Wealth’s Retirement Planning service can help you interpret contracts and define what counts towards service and pay, so you’re not relying on guesswork.

2. Calculate your gratuity accurately

Don’t assume the number your employer quotes is correct; check it yourself using the rules. Key elements:

• Only basic salary counts (this is standard legal practice).
• Count continuous years of service; leaves or breaks (if they reset continuity) might affect the calculation.
• Keep in mind there is a cap: you can’t receive more than two years’ basic salary under UAE law, even if you’ve worked much longer.

Example: Suppose you earn AED 12,000/month and have completed 7 years of employment.

• First 5 years: 21 days × 5 = 105 days ≈ 3.5 months’ salary.
• Next 2 years: 30 days × 2 = 60 days ≈ 2 months’ salary.
• Total = 5.5 months × AED 12,000 = AED 66,000.

That sum is helpful, but alone often won’t sustain a long retirement, especially for those wanting to retire early, hold assets abroad, or live in high-cost areas. For more insight, use Hoxton Wealth’s WealthFlow tool to project your income, including gratuity + other savings, so you can see realistic retirement scenarios.

3. Decide whether to transfer other pensions

If you have pensions from the UK, Australia, or other home countries, these are often still assets you control. As an expat, you should consider:

• International SIPP (for UK nationals) allows flexibility, global investment choices, and the oversight of UK regulation. Hoxton Wealth offers SIPP services that let you hold investments, draw income when ready, and see how your portfolio performs via Market Tracker and SnapTrade integration.
• QROPS (for select UK‐based pensions) if you permanently live outside the UK/EEA. These may have tax or regulatory implications; they’re relevant in fewer cases now following recent rule changes.
• For non-UK nationals (US, Australia, etc.), check if your domestic or home country pension allows portability, consolidation, or offshore investment options.

Making this decision properly can avoid unnecessary fees or tax surprises. A financial planning service, particularly the “Pension Transfer Guide,” provides detailed comparisons of what transferring vs leaving pensions in place might cost you.

4. Open a supplementary savings plan

Since gratuity will usually not be enough, building additional savings and retirement income is essential. Some strategies:

• Employer-sponsored savings plans, if your company offers one (common in multinational firms).
• Private pensions or investment accounts, either local or with international providers. You might choose mutual funds, ETFs, or diversified portfolios.
• Self-directed accounts, where you control investment choices.

When choosing such a savings or pension wrapper, pay attention to fees, transparency, flexibility, and portability. Hoxton Wealth offers private investment and pension advice that helps you pick cost-effective solutions that match your risk tolerance and long-term goals. 

5. Plan for taxation in retirement

Taxes may not be an issue while you work in the UAE (since there is typically no personal income tax), but where you retire or reside later on can change everything. Here are some factors to consider:

• If you return to your home country (e.g. the UK), your withdrawals from supplementary pensions (or transferred pensions) may be subject to local tax.
• If you retire in another jurisdiction, find out whether there is a double-tax agreement with that country to avoid paying tax twice.
• The end-of-service gratuity is usually tax-free in the UAE, but it may be taxable in your country of residence upon withdrawal.

Being proactive helps. Hoxton Wealth’s Tax Planning service has specialists to map out your retirement tax liability depending on where you live, and help structure withdrawals to minimise taxes.

6. Seek professional cross-border advice

Finally, because cross-border retirement involves many moving parts, mistakes can be costly and often irreversible. It’s vital to work with advisers who understand both the UAE environment and your home country’s pension/tax laws. What to expect from good advice:

• Review of your gratuity entitlement, check that your employer’s calculation matches what the law demands.
• Comparison of whether to transfer home-country pensions or leave them.
• Optimisation of investment strategy, balancing risk, currency exposure, inflation, and your planned retirement age.
• Assistance with completing paperwork and ensuring compliance with both the UAE labour law and your home country’s pension/tax regulations.

Hoxton Wealth offers regulated financial planning and access to experts in Retirement Planning, Investment, Tax, and Estate Planning, which is especially important in international settings.  

Tools like SnapTrade let you monitor investments, WealthVault secures your important documents, and the advisers help you build a plan that’s not just theoretically good, but practically feasible and sustainable. 

1. Explore the New Savings / Funded Pension options

The UAE is introducing voluntary pension-savings schemes (e.g., Savings Scheme & Golden Pension) that go beyond traditional gratuity, offering investment growth, portability, and better protection. If your employer participates, these can give you more certainty and reduce risk compared to relying solely on a lump-sum gratuity. 

2. Start consistent contributions early

Even without mandatory expatriate pension coverage, the earlier you begin setting up supplementary savings or retirement plans, the more you benefit from compounding returns. Regular small contributions into private plans, international SIPPs (if available for your nationality), or employer savings plans can significantly improve retirement readiness.

3. Manage currency and inflation risk proactively

While the UAE dirham is stable (pegged to the US dollar), your retirement goals might involve expenses in a different currency (GBP, EUR, etc.). Also, inflation (both local and global) can reduce the buying power of your gratuity and savings. Use multi-currency investments or portfolios with inflation-hedged components to protect your purchasing power. 

4. Keep a clear, portable financial plan

Plan for possible future relocation. Options like voluntary savings schemes allow you to preserve benefits even if you leave the UAE. Ensure your supplementary retirement savings are not locked to one employer or location. Maintain clear records, keep your documentation updated, and use tools or services (like Hoxton Wealth’s Account Synchronisation, WealthVault) to track all your retirement assets globally.

5. Seek transparent advice and regular reviews

With ongoing regulatory changes (e.g., Savings Scheme, Golden Pension, alternative EoS benefits), it’s essential to use regulated financial advice and revisit your plan periodically. Make sure you understand fees, risks, flexibility of withdrawal, and tax implications in both the UAE and your home country. Working with experienced expat advisers ensures you stay compliant and maximise value. 

For expats in the UAE, retirement planning requires initiative. Unlike Emiratis, you won’t benefit from a state pension. Instead, you’ll receive a gratuity payment, useful but rarely sufficient. The key is to combine gratuity with international pensions, savings plans, and tax-efficient strategies. 

With the right structure, you can turn the UAE’s tax-free advantage into long-term financial security. At Hoxton Wealth, we help expats design retirement strategies that are compliant, tax-smart, and portable across borders.  

Our Retirement Planning, Retirement Income Planning, and Financial Planning services tailor your path to your goals.  

Start planning today, and secure the retirement lifestyle you’ve worked hard for in the Emirates and beyond.