More UAE Companies Help Staff With Pensions

By Retirement
More UAE Companies Help Staff With Pensions

The growing numbers of expats working for longer in the United Arab Emirates (UAE) has led to increasing numbers of companies implementing pension schemes for their staff.

When workers leave a company in the UAE, they usually receive a cash payout known as an end-of-service benefit or a gratuity. For this, the recipient must meet some legally laid-down criteria.

It’s generally not at the same levels of provision expected by American or European workers for their pensions which is why the UAE government is planning to introduce a mandatory pension scheme for all of its working expatriates.

But many companies already offer a pension scheme in a bid to retain top staff and encourage people to work longer in the UAE.

Research by Towers Watson, a professional services company, revealed that around 33% of organisations asked in the Middle East were already offering retirement plans as well as long-term serving options to expat staff.

Retirement savings

Around 50% of companies offering schemes do so to all of their staff, while the remainder restrict access to their pension scheme to top management and professional workers.

Although these plans are fairly common in the UAE and Saudi Arabia they are becoming increasingly popular in countries such as Oman, Qatar and Bahrain.

A Towers Watson spokesman said: “We have seen a growth in these plans being provided in the region over the past five years.

“Most of these are defined contribution plans and the size of the savings pot depends largely on the investment performance achieved.”

The changes are being led by companies recognising that workers tend to work longer in the Middle East if they have a pension plan to pay into.

End-of-service benefits

Some companies also provide a savings plan as well as the mandatory end of service benefits, which means that some workers pick up both benefits when they leave the company.

However, the savings plans are not solely set aside for retirement, and younger members of staff use them to for large cash purchases, like a car and house deposits.

Not every firm with a pension scheme actually makes a contribution to it, though most do, and most firms are using external vehicles such as a trust to run their scheme.

In future, it looks likely that the UAE government will introduce a mandatory pension scheme for all working expatriates, which will see more investment locally for funds and a wider range of employees benefiting.

There’s no timescale for its introduction which means the much anticipated end-of-service gratuity will remain for some time yet.

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