What is the UAE’s Gold Pension Plan?

National Bonds, a Shariah-compliant savings and investment company Owned by Dubai Investments, a gold pension scheme was unveiled on Tuesday to help Private sector expatriate employees Invest in their end-of-service benefits.

Pension scheme expected to help employees in UAE Bridge their retirement savings gap As well as supporting employers to fund their end-of-service financial commitments.

The UAE, the second largest economy in the Arab world, has undertaken several economic, legal and social reforms in recent years to strengthen its business environment, increase foreign direct investment, attract skilled workers and provide incentives for companies to set up or expand operations.

These moves also help inspire current service terminations Remuneration planemployed residents are entitled to after they have worked with the company for at least 12 months.

here, National Explains what the Gold Pension Scheme means for employees and employers in the UAE.

How does the Gold Pension Plan work?

Companies can enroll in a state bond’s Gold Pension Plan by investing in a lump sum of employee end-of-service benefits accumulated over many years or by investing a portion.

Employees also have the flexibility to contribute to the pension scheme for as little as AED 100 ($27.22) per month.

Under the pension scheme, employers open individual accounts for their employees, and the funds will be distributed on a pro-rata basis.

What is a tip?

The UAE’s gratuity system is an explicit end-of-service benefit that all expatriate employees are entitled to upon completion of at least one year of service.

The UAE labour law covers gratuity, the amount of which is calculated based on the employee’s years of service and basic salary.

What is a pension plan?

A pension plan is a benefit in which an employer makes regular contributions to a managed pension fund on behalf of an employee. The amount is based on a percentage of the worker’s salary. Employees can also choose to make voluntary contributions, which are withdrawn from the fund after retirement.

Does the UAE have a pension system?

Emiratis working in government and private sector Eligible for pensions and other retirement benefits According to the UAE government, after reaching the retirement age of 49 or having served for at least 20 years in total.

In the UAE, pensions for Emiratis are administered by agencies such as the Abu Dhabi Pension Fund, the Sharjah Social Security Fund and the General Pension and Social Security Authority.

Where will the Gold Pension Plan money be invested?

Mohammed Al Ali, chief executive of the savings plan provider, said National Bonds would invest end-of-service benefits of employees in money markets such as bank deposits, Islamic bonds and the company’s income-generating real estate portfolio.

The company will take a low-to-medium-risk approach to such investments.

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Who can participate in the Gold Pension Plan?

The Gold Pension Plan is for foreign employees looking for a simple and low-risk investment environment to save and grow funds during their golden years. The retirement age for all private sector employees in the UAE is 65.

Mr Al Ali said that before the introduction of workplace savings schemes for foreign workers, pension schemes in the UAE were often offered either by asset managers to sophisticated investors or in the form of complex, expensive insurance savings products with early redemption Charge high fees. National.

How does the Gold Pension Plan benefit employees?

Employees are able to bridge the savings gap and better plan for their retirement needs as their end-of-service benefits invest in assets such as real estate and the money market, allowing their savings to grow.

Do employees have control over the tips they invest in?

Employees can monitor their superannuation savings in real time through their personal accounts on the National Bonds mobile app.

With the permission of their employer, they can withdraw part of their end-of-service savings from their pension plan. However, they can withdraw their individual contributions at any time.

How does it benefit employers?

Most employers in the UAE and the wider Middle East pay end-of-service liabilities for departing employees from working capital, according to a survey by consultancy Willis Towers Watson.

The Gold Pension Plan is designed to support businesses by keeping employees on the job and help them plan for their end-of-service financial commitments, rather than paying them out in company cash when benefits are due.

How many users have registered so far?

A Dubai-based company with 9,000 employees has subscribed to the National Bonds pension scheme.

It opens 9,000 individual customer accounts for employees and contributes their accrued end-of-service benefits to these accounts on a pro-rata basis.

Does the government provide a pension scheme for foreign workers?

In March, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, Launch of savings retirement scheme for non-UAE employees Work in the emirate’s government and public sector.

they will Join a savings plan by default And the employer will provide the full end-of-service gratuity to the plan from the date of enrollment, excluding financial costs for prior years of service.

The Dubai Pension Fund scheme will be overseen by the Board of Directors with the assistance of the Dubai International Financial Centre.

Employees can choose to contribute to the plan themselves and have the right to withdraw their personal savings at any time. Employee participation in the program will cease at the end of their service.

Can UAE foreign workers join other pension schemes?

DIFC was the first in the UAE to overhaul the remuneration system when it launched the DIFC Employee Workplace Savings (Dews) scheme in February 2020.

Employers in free zones are required to make monthly contributions to the trust-administered fund equal to 5.83% or 8.33% of the employee’s wages, depending on the employee’s length of service. Employees may also choose to make additional voluntary contributions to the Dews program.

Axa Green Crescent Insurance also launched a workplace savings plan last year. Employee Secure Saver offers a range of investment options and Shariah compliant funds to suit the needs of employees with a higher risk appetite and those who wish to invest in accordance with Islamic principles.

Updated: October 13, 2022, 6:07am