Dubai: Starting today (July 1), foreign nationals working at Dubai government enterprises will make monthly contributions towards their end-of-service benefits. This applies to all non-UAE Nationals employed with the 61 government owned/affiliated entities in Dubai.
The pension scheme – DEWS – is already applicable to DIFC licensed entities. It’s extension to the 61 Dubai government organisations sets the marker down for employees to have a say - and contribute - in their end-of-service benefits. Further expansion of the programme would in time offer options for the legacy employer-paid schemes in place across Dubai's private sector. And according to sources, similar initiatives could be introduced in the othr emirates too.
DEWS stands for DIFC Employee Workplace Savings Plan.
"The mandatory employer contribution levels will vary depending on the legislation, regulation, or policy the entity is subject to; the employee’s tenure (in the organization); and their basic salary component," said Claudia Maldonado, Principal - DC Solutions at Mercer Financial Services (Middle East) Ltd. "The employee contributions are voluntary; therefore the level is defined by the individual."
Where will the funds go?
The employees at these Dubai government organisations will likely choose from a pool of 11 investment options (subject to any legal restrictions). There will be options provided for those risk-averse employees seeking capital protection.
This acknowledges that “members have differing investment needs and differing attitudes to risk, and therefore designed a concise choice of options that caters to a wide range of potential circumstances,” said Maldonado. “Each of the fund options have been carefully selected after taking due advice from DEWS plan’s appointed investment advisor, Mercer.”
Extension to Dubai’s private sector?
Until now, more than 1,500 companies operating under DIFC umbrella have signed up for DEWS. “It is anticipated that DEWS will be extended to the private sector of Dubai,” said Sajeev Nair, Senior Executive Officer at Zurich Workplace Solutions (ME) Ltd..
- When an employee leaves service, their options in relation to DEWS are:
- Remain invested and benefit from any investment performance whilst continuing to manage their investment strategy (though no further contributions can be made;
- Take a partial withdrawal by disinvesting a portion of their account value as cash to their bank account and leaving the rest invested until a later date; and
- Take a full withdrawal, disinvesting their full account value as cash to their bank account.
- DEWS offers complete flexibility, which means employees can access their benefits at a time that suits them, and importantly we can arrange payments both locally or internationally which means employees can have their benefits paid to their home country if required (non-sanctioned countries only).
Pension contribution mix
Employers will be required to make a monthly contribution to DEWS for each foreign employee (save for some exemptions) towards their end-of-service benefits.
The particular amount will depend on the legislation, regulation, or policy the entity is subject to, the employee’s tenure and their basic salary component.
"Foreign employees are not required to make any mandatory contributions to the plan," said Chris Cain, Client Services Director at Equiom Fiduciary Services (Middle East) Ltd. "However if they wish to build the value of their savings, they are welcome to contribute voluntarily through salary deduction, with such contributions not to exceed the amount of their salary."