FNC member insists classing rise of up to 45 per cent as basic pay would let Emiratis retire more comfortably, and make room for new jobseekers, but the Minister of State for Financial Affairs says it would cost the Government billions in pensions.
Emiratis to get National Day payrise as benefits not basic salary
ABU DHABI // Listing the recent pay rises for Emiratis as salary, instead of including them in workers' benefits such as transport, would cost the Government billions and lead to too many early retirements, the FNC has heard.
On National Day, the President Sheikh Khalifa ordered increases of up to 45 per cent, but they have been listed under benefits.
Mohammed Al Qubaisi (Abu Dhabi) yesterday asked the Minister of State for Financial Affairs why the pay rises for those in the public sector were not categorised as basic salary increases.
Mr Al Qubaisi said there would be no rise in pensions as they were linked to basic salary, not benefits.
"If added [to salary], it will help other Emiratis join work as the older ones holding on to their jobs will be able to retire," he said. "We need to give others in need of work a chance as well."
But Obaid Al Tayer, the minister, said it was not possible. He said pay rises of 70 per cent were granted to government employees in 2008 and were eventually merged with basic salaries.
The cost was more than Dh13.9 billion after rises in pensions were included, Mr Al Tayer said.
"It was decided then that the Government would pay to the pensions over a period of 10 years, and at the same time the Government would be working at paying them off at an interest rate of 5 per cent," he said.
Mr Al Tayer said this year's increase was not included in the federal budget so it would need to be studied before it could be merged with basic salary.
"But currently, the Government has no intention to study it," he said. "We expect it to cost the same amount that I mentioned [for 2008] if the increase was added to basic salaries.
"Right now, there is no intention to include it in the basic salary."
Mr Al Tayer said pensions were paid over eight to 10 years from the moment of retirement.
In Abu Dhabi, retirees receive 80 per cent of their last salary as a monthly pension.
But Mr Al Qubaisi insisted increasing the basic salary would mean people could retire comfortably and make room for other Emiratis.
Mr Al Tayer responded: "With all due respect to the member, I can say that encouraging early retirement to employ other Emiratis is against the pension's goals, which works to encourage Emiratis not to retire early because it has a bad effect on the authority."
Mr Al Qubaisi said he did not want to encourage early retirement, he only wanted a more secure future.
"To earn Dh50,000 and then retire and get Dh10,000, how? When they still have kids and still have to pay for life expenses?"
The minister said the Government was doing a lot for Emiratis. He said the minimum basic pension had increased to Dh10,000 this year from Dh6,000.
"This shows the Government is always ensuring good income of an Emirati and ensuring a good standard of living," Mr Al Tayer said.
Dr Abdullah Al Shamsi (Sharjah) said the income was not enough but the minister said it could not increase.
"From work to retirement they get the equivalent of their last salary," Mr Al Tayer said.
"So if someone retires in 2001, his salary is different to someone who retired in 2010. There are people we cannot change the pensions for.
"No ministry can change this. This folder has been transferred from work to the pensions, in accordance to the law."
Dr Al Shamsi insisted there should be increases and the FNC's financial committee said it would study the outcomes of a possible increase and present the findings later.
The Executive Council last week ruled the Abu Dhabi pension fund would receive an extra Dh4.8bn to "address the sudden shortfall from the increase in salaries".