8th Nov 2023, By Ernest Louw
Aimed at enhancing the welfare of workers in the private sector and free zones, the United Arab Emirates (UAE) has unveiled a new end-of-service benefits scheme. This innovative system includes the establishment of savings and investment funds, which will be closely monitored by the UAE Securities and Commodities Authority in collaboration with the Ministry of Human Resources.
Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, emphasized that the primary goal of this initiative is to safeguard workers' savings and ensure their safe investment.
The scheme will be optional for companies operating in the UAE, and workers in the government sector will also have the opportunity to participate to boost their retirement savings.
This development underscores the UAE's commitment to attracting top talent by improving gratuity benefits for private-sector workers. The new scheme offers employees three diverse investment options:
Employees can access their end-of-service benefits once their employment relationship with their current employer concludes. Unlike some countries, the UAE does not currently offer a state or employer-sponsored pension plan that provides a monthly allowance during retirement.
The closest thing to a pension plan in the private sector prior to this announcement was the DIFC Employee Workplace Savings Scheme (DEWS), introduced in 2020. Under this scheme, DIFC firms made monthly contributions ranging from 4.83% to 8.33% of their staff's monthly basic pay. Workers were granted the flexibility to withdraw these funds upon termination of their employment or leave them invested for future use.
Beyond the private sector benefits, Sheikh Mohammed also announced that the UAE has approved a new system to provide rewards and incentives for federal government employees. The aim is to foster competitiveness within the UAE national workforce and recognize outstanding achievements at various levels. These incentives will be awarded for exceptional annual performance, outstanding achievements at the entity level, and national achievements that employees achieve for the state.
The introduction of the new end-of-service benefits scheme demonstrates the government's dedication to worker well-being and positions the country as an attractive destination for talent from around the world. This bold move towards securing employee futures through smart investments is a testament to the UAE's forward-thinking approach to economic and social development. It is a stride towards a brighter, more secure future for the nation's workforce, ultimately benefiting the UAE community.
The UAE's recent announcement of it’s new end-of-service benefits scheme marks a significant step towards securing the financial future of its workforce while enhancing the nation's appeal to global talent. Beyond providing employees with greater financial security and choices, this initiative fosters a competitive edge that will benefit the UAE in the long run.
As businesses and employees adapt to these changes, actuarial firms will play a pivotal role in ensuring a smooth transition and optimizing the benefits of this scheme. With the UAE's unwavering commitment to worker welfare and its forward-thinking approach, this initiative sets an inspiring example for other nations seeking to enhance their employee benefits and drive economic growth.
East Africa and Kenyajoseph.firstname.lastname@example.org
North Africa - Egyptahmed.email@example.com
North Africa - Francophonemohammed.firstname.lastname@example.org
Subscribe to our newsletter
To receive your quarterly updates.
By completing this form you are opting into emails from Lux Actuaries. You can unsubscribe at any time.
© 2023 All rights reserved.