UAE Minister Pushes Creation Of Government-backed End Of Service Benefits Scheme

According to a senior UAE official, the emirate needs to create investment funds for the use of expats as regards end of service benefits and retirement.

At the first UAE Workers’ Incentives and End of Service Benefits conference, human resources director general Dr Abdulrahman Abdulmana al Awar told the assembly that accelerating advancements in global technology, total years of service and increased retirement ages all strongly suggest the need for regionally established and managed investment funds. He noted his idea would need a certain amount of movement in the traditional Arab way of thinking, as the easiest way to set this up would be to involve professional companies in the sector in providing good investment opportunities for employees.

Al Awar also believes such a scheme would help cement long-running business relationships between employers and their expat employees. Creating an investment plan covering end of service benefits for expat workers would, he added, give savings opportunities as well as lifting investment in the UAE. He’s certain the overall market stability and low-risk climate for investments in the emirates would help encourage savings by employees, and sees the EOSB schemes developing as privately-owned investment options regulated by the government. Companies setting them up would also need to give the advice necessary to protect the savings of expat workers.

The director-general’s proposal is also in line with financial experts’ recent warnings that UAE-based expats are struggling to save against the threat of inflation and the temptations of the region. In addition, a recent survey strongly suggests most of its respondents are reluctant to invest due to their inability to correctly manage their finances. One problem facing such a scheme is the lack of a law forcing employees to join in severance pay plans not included in their company’s balance sheet, thus leaving investors at risk should the business fold.