Dubai: The latest law on creating a long-term savings plan for certain employees in Dubai is expected to give workers the ability to pick how their money gets invested through different risk profiles.
The DIFC Employee Workplace Savings Plan (Dews) will come into effect from February 1 for the 24,000 employees based at Dubai International Financial Centre. It will restructure the current end-of-service gratuity scheme into a managed savings plan.
Experts say the new plan will help every employee have their money managed by a professional and benefit from investment gains, rather than receive a lump sum of money when their contract is terminated.
It is still unclear how employees’ money will be invested or in which markets, but analysts expect the funds will largely go to equities and fixed income, including sukuk.
Lawyers who examined the new law said it is likely that each employee will be able to log in to an online portal to track their investments and pick a risk profile (from low to high). Based on that profile, fund managers will allocate the money into different asset classes.
Lawyers also suspected that with the new plan, employers will have to hire experts to provide financial and investment advice to employees.
DIFC had earlier said that the investment adviser for the Dews plan is Mercer, the global consulting company. When contacted by Gulf News, Mercer said it could not publicly comment on the matter just yet, as DIFC is handling the communications on the plan.
Other fund managers in Dubai who spoke on condition of anonymity said that it was still unclear whether the savings will be invested in assets in the UAE and the region or if they can be invested in global assets such as stocks listed in the US. If the investments were limited to assets in the region, fund managers said they expected employees to opt for less risky profiles as investors are unhappy with long-term returns from regional stock markets.
The announcement of the new plan has brought about speculations that this may be eventually rolled out across the rest of the UAE, rather than be limited to DIFC employees. Lawyers said that the Dews plan will help the country attract and retain top talent as it will provide an equivalent to pension schemes.