The UAE launches a new system for residents as an alternative to end-of-service rewards
The benefits of the voluntary savings system, a novel alternative technique for end-of-service awards for expatriates in the UAE, were outlined by the UAE Ministry of Human Resources and Emiratisation.
The UAE Ministry of Human Resources disclosed this method, which allows the money allotted for end-of-service incentives for citizens and residents working in private sector enterprises to be deposited in leading investment funds.
It enhances the principle of ease of doing business
The Ministry noted in a presentation delivered at a recent press conference to herald the start of implementing the new savings system that it improves the principle of ease of doing business.
It is regarded as a driving force in improving the country's position as one of the most desirable places to live and work, in addition to profiting from the robust infrastructure of investment funds and service providers in the system licensed to handle workers' end-of-service benefits.
Focus on commercial activities and development
What improves the system's focus on commercial activities, development, and capital building rather than operational matters in managing and disbursing end-of-service rewards, increasing employee job loyalty, and increasing levels of satisfaction and productivity at work by protecting their interests and financial entitlements.
The employer's medium-term cost of participating in the savings scheme is less than the cost of the existing end-of-service reward.
Various savings opportunities
The system also offers numerous savings options for workers to create entitlements and savings in order to ensure prudent financial planning and family stability for their families, as well as to profit from investment returns.
There is also the possibility of enhancing a skilled worker's end-of-service compensation if he chooses high-return investment portfolios, or by paying an additional subscription if the citizen or resident worker prefers the optional subscription.
Increase employee understanding and financial planning for personal savings
The system's voluntary (optional) contribution option is one of the positives, as it helps to increased knowledge and financial planning of individuals' personal savings and allows them to continue investing their rights after they leave work if they so wish.
According to the Ministry, the employer submits a subscription application, selects one of the licensed investment funds, and pays the subscription for the employees he wishes to enroll in the alternative voluntary savings system, during which the amounts designated for end-of-service rewards for employees working in private sector companies are invested in leading investment funds. In the system, they have the choice to keep their previous period's benefits in accordance with labor relations law.
Objectives of the savings system in the Emirates Tour
- First: Supporting the economic system in the UAE and achieving protection and well-being for the country’s workforce.
- Second: Increasing individual investment returns for beneficiaries and allowing the worker to pay an additional optional contribution.
- Third: Enhancing the attractiveness and flexibility of the labor market that supports workers by improving the level of services provided to them.
- Fourth: Taking advantage of opportunities to invest money in investment tools for economic activities in the country.