Employers in the private sectors have been urged to register for the voluntary ‘Savings Scheme’ as an alternative to ‘end-of’service’ benefits for their employees. The Ministry of Human Resources and Emiratisation (MoHRE) on Thursday highlighted the notable efficiency of the voluntary ‘Savings Scheme’ for private-sector workers and its effectiveness in enhancing ease of doing business1.
The Savings Scheme boosts private sector companies’ ability to attract and retain talent, while protecting workers’ financial entitlements and providing them with opportunities to grow their savings through investment returns, supported by reliable, accredited investment funds in the country. MoHRE and the Securities and Commodities Authority (SCA) had approved a group of investment funds to operate the voluntary alternative end-of-service benefits scheme, after verifying that the operating institutions meet the necessary standards and requirements for the establishment and management of savings funds1.
In a press statement, the Ministry urged private sector companies in the UAE to participate in the Savings Scheme to enhance their employees’ wellbeing, attract talent, and strengthen their corporate reputation in the increasingly competitive UAE labour market. The Scheme enables employers to establish themselves as outstanding places to work that prioritize their employees’ financial growth and future security, which fosters employee loyalty and helps attract exceptional talent1.
Moreover, participating in the Savings Scheme enhances employee productivity by allowing them to grow their financial assets and gain investment returns on their savings through secure and reliable investment opportunities. The system offers a proactive approach to managing financial obligations and promotes companies’ long-term financial health1. The cost for employers participating in the Savings Scheme is lower than the cost of paying end-of-service gratuities, as contributions are based on the basic salary of the employee at the time of payment, rather than the basic salary at the end of service, which is typically higher.
Companies wishing to join the Savings Scheme can apply through the Ministry’s service channels. Select one of the accredited investment funds. Pay the subscription fees for the employees they wish to enroll in the system. Workers will keep the gratuity they earned before being enrolled in the Scheme by their employer. The gratuity will be calculated as per the new system starting from the date the employee is registered in it, with all earnings (before and after the new system) disbursed at the end of the contract with the employer.
To increase savings and investment returns, workers have the option to make additional contributions of approximately 25% of their total annual salary. They can also withdraw some or all of the contributions and investment returns, based on the terms and conditions of the system. When a worker moves from their current employer to a new one, they may either withdraw their accrued amount from the fund contributed by the current employer, or choose to transfer it to the new employer’s Savings Scheme.
The Savings Scheme is a significant step towards modernizing the UAE’s labor market and providing employees with more control over their financial futures. By offering a flexible and beneficial alternative to traditional end-of-service benefits, the Scheme aims to create a more attractive and competitive environment for both employers and employees.
