Employers in the UAE have been encouraged to sign up for the voluntary 'savings scheme,' which serves as an alternative to the traditional end-of-service benefits system, offering enhanced benefits. This new initiative enhances private sector companies' capacity to attract and retain skilled employees, while safeguarding workers' financial rights and providing them with opportunities to increase their savings through investment returns, supported by trustworthy investment funds within the country.
The Ministry of Human Resources and Emiratisation has strongly recommended that private sector companies in the UAE participate in the savings scheme to improve their employees' welfare, attract top talent, and bolster their corporate image in the increasingly competitive local labor market. The MoHRE, in collaboration with the Securities and Commodities Authority (SCA), has approved a selection of investment funds to manage the voluntary scheme, ensuring that these institutions meet the required standards for the establishment and management of savings funds.
For employers, the scheme allows them to position their companies as premier workplaces that emphasize employee financial growth and future security, fostering employee loyalty and attracting new talent. Participation in the scheme boosts employee productivity by enabling them to grow their financial assets and earn investment returns on their savings through secure and reliable investment opportunities. The system provides a proactive method for managing financial commitments and promotes companies' long-term financial stability, particularly since the medium-term cost for employers participating in the savings scheme is lower than the cost of paying end-of-service gratuities, as contributions are based on the employee's basic salary at the time of payment, rather than the higher basic salary at the end of service.
Private companies interested in joining the 'savings scheme' can apply through the Ministry’s service channels, choose from the accredited investment funds, and pay the subscription fees for the employees they wish to enroll in the system. The authority provides regularly updated information on accredited investment funds on its website, along with details on the voluntary alternative end-of-service benefits system 'savings scheme’ for private sector workers.
Once an employer has applied for the scheme, employees will retain the gratuity they earned before being enrolled in the scheme. The existing end-of-service gratuity system is then suspended for employees registered in the new system, and the monetary sums they have accrued are calculated based on their years of service, in accordance with the law, up to the date they join the new system. The gratuity will be calculated as per the new system starting from the date the employee is registered in it, with all earnings (before and after the new system) disbursed at the end of the contract with the employer.
To enhance savings and investment returns, workers have the option to make additional contributions of around 25% of their total annual salary. They can also withdraw some or all of the contributions and investment returns, based on the terms and conditions of the system. The scheme also allows skilled workers to select any of the investment options it offers according to their investment preferences. Meanwhile, unskilled workers can only be enrolled in the Capital Guarantee Portfolio.
Additionally, the scheme allows optional participation for additional categories wishing to benefit from its advantages, giving self-employed individuals, those with freelance work permits, non-citizen employees working in government entities or their affiliated establishments and subsidiaries, as well as Emirati employees in the public and private sectors, the option to register in the system through additional voluntary contributions only. This allows them to protect, invest, and grow their savings, ultimately receiving them as an end-of-service gratuity. Meanwhile, employers remain responsible for paying the contributions for UAE nationals in pension and social security authorities and systems.
When a worker moves from their current employer to a new one, they may either withdraw their accrued amount from the fund contributed by the current employer, or choose to keep it in the fund to continue investing with the option of accessing it at any time. The new employer may take over the previous employer’s contributions to the same fund after establishing a contract with the fund. The new employer may also register the worker with another fund manager and pay the associated contribution fees.
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