A local newspaper has said that the government of Dubai’s recently launched savings scheme targeted at expat employees working in the public sector comes as a template for a new social security structure that can be emulated by both public and private sector in the country.
“Employee savings plans (ESPs) have been implemented successfully in many countries across the world, both public and private sectors to help employee’s save and invest a portion of their regular income with a predefined contribution from the employer,” Gulf News said in an editorial on Friday.
While contributory pensions, provident funds and such other pooled savings/investment schemes with employer sponsorships are known by different names, all these serve the same purpose of “enrolling the employees into a compulsory savings scheme that comes to their aid when they retire, or the service tenure comes to an end,” the paper explained.
Dubai is not new to ESPs. In February 2020, Dubai International Financial Centre (DIFC) implemented the DIFC Employee Workplace Savings Plan (DEWS). The scheme replaced the end-of-service gratuity payment regime that has been in place since the inception of the DIFC in 2004.
The DEWS plan, a master trust structure domiciled in the DIFC, gets compulsory contributions from the employers in proportion to the employee’s benefits under the previous end-of-service gratuity structure.
The daily continued, “In addition to the employer’s contribution, most such schemes allow employees to set aside a portion of their wages for long-term goals, such as paying for children’s college tuition or purchasing a home. In different countries, the employers’ contributions vary depending on the local regulations.
“The new Government of Dubai savings plan will give its expatriate employees opportunities to enhance their end-of-service benefits through multiple savings and investment schemes run under the supervision of the DIFC and a board of trustees, and managed by reputed international financial institutions.
“Unlike the current end-of-service benefit structure, the new scheme gives the employees a chance to tap into various investment opportunities including Sharia-compliant ones to enhance their savings.”
While announcing the scheme’s launch, the government has hinted at exploring the possibility of extending it to the private sector.
The Dubai-based daily concluded by saying, “A first in the region, the scheme, clearly will establish a pioneering social security structure aimed at protecting the rights of the employees in the country that will make the UAE an attractive career destination for the global talent pool.”