National Bonds' Golden Pension Scheme is principally targetted at managing funds provided by UAE employers. To this, expat employees can contribute monthly for their own savings, if they want to. Image Credit: Shutterstock

Dubai: UAE employers who want to sign up for National Bonds’ new Golden Pension Scheme have the option to put in lump sums or make monthly contributions on behalf of their employees. The funds thus collected will be managed by National Bonds in Sharia-compliant products, and with the emphasis being on risk-free investments over the longer term.

On the funds collected, “Sukuks (savings bonds) will be issued under employees' accounts with National Bonds as per the allocation provided by the company," said Mohammed Qasim Al Ali, Group CEO at National Bonds. "The Sukuk issued under the product will be locked for redemption - and can only be initiated based on the company’s request."

The contribution to the GPS can only be made by the employer. Expat employees with these organisations can add to this - starting from Dh100 per month as additional savings of their own. This cumulative amount saved can be availed in addition to the earned gratuity provided by their organization.

Individual contributors to the Golden Pension Scheme will automatically enroll for National Bonds’ Dh35 million rewards programe. Image Credit: Supplied

The GPS subscribers also have the opportunity to participate in National Bonds' Dh35 million rewards program, where they can qualify to win cash prizes, cars and other giveaways.

"The GPS is open to all corporates in the UAE, be it in the public or private sectors," said Al Ali. "We’re happy to sign up employees from any of the registered corporates."

National Bonds would focus on acquiring income generating assets such as fixed income and real estate that provide sustainable cash.

- Mohammed Qasim Al Ali, Group CEO at National Bonds

Savings funds will not have lock-ins

The additional contribution made by employees is not locked for redemption, and employees have the flexibility to access their own savings.

The Golden Pension Scheme represents one of the first attempts to create pension-linked investment funds among the workforce in the UAE. Until now, organisations only focussed on gratuity schemes that they were expected to contribute to as per the country's employment rules. It was left to the Individual employee to sign up for pension-linked savings schemes.

Now, in a span of months, two heavyweight pension options have been introduced; first, this summer, DIFC widened the scope of its programme to manage savings of all employees working with government departments in the emirate. Then comes the launch of the National Bonds' Initiative.

How can expat employees contribute to Golden Pension Scheme?

  1. Those expats who are not part of the scheme can always choose to invest in other savings and investment plans operated by National Bonds. There is the Global Savings Club, which is a voluntary monthly savings plan starting from Dh100.
  2. Employers have the freedom to decide how many of their workforce numbers would join the scheme.
  3. National Bonds has already signed up a private company with over 8,000 employees.

Not a gratuity replacement

The CEO makes it clear that the Golden Pension Scheme is not a replacement for gratuity programmes run by the various employers. "Rather, it can be considered an enhancement to the gratuity being offered by corporates," said Al Ali. "From our side, we will manage the fund by investing in various low- to medium-risk Sharia-compliant asset classes."

On whether growing concerns about a looming global recession will limit the new scheme's chances - with individuals worrying about balancing their monthly budgets - the CEO said: "On the contrary, such fears should strongly encourage employers to safeguard their employee’s gratuity. After months of research and development, we identified a large segment of the working population is looking for a much simpler pension offering vs. what asset management or insurance companies are offering. This finding fueled our decision to launch GPS at this given time.

"Our approach to identifying low to medium-risk income-generating investments in the region and beyond have fared well over past years. We’re confident in our ability to navigate the future as well.

"The GPS seeks to accommodate companies with a large employee base and provides them with a customizable solution with the flexibility of the type and form of financial care it wishes to arrange for their employees.

"Another aspect we have to remember is that several companies are looking at improving their employee satisfaction quotient and showing they are committed to supporting their journey in the financial realm. With the GPS, we want to help these corporates in enhancing their people strategy and succeed in retaining their workforce."