Golden Pension Scheme UAE
National Bonds is seeking competitive advantages by being one of the UAE asset managers to run its own pension fund program. Image Credit: Shutterstock

Dubai: The UAE fund manager National Bonds is in the final stages of putting together a new pension fund targeted at employers. It comes as the UAE moves closer to creating a new framework for how funds collected as part of end-of-service payments are utilized.

“As one of the major asset managers in the UAE, we are best placed to oversee pension funds,” said Mohammed Qasim Al Ali, Group CEO at National Bonds. “We are awaiting approval from the regulator (Securities & Commodities Authority) before the launch of our first pension fund. In the next 6 weeks, we should be in that position.”

The National Bonds’ fund will tap UAE based employers to place monies that have been earmarked for their end-of-service – or gratuity – schemes.

“There are few UAE based asset managers who are in the pensions’ game,” said Al Ali. “As a company, a dedicated fund gives us some sizeable advantage.”

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Currently, how employers manage their gratuity programs diverge wildly, depending on factors such as the size of the organization, their workforce numbers, cashflow coming in, and other factors. What the UAE plans to do is create a regulatory framework that would provide more clarity and transparency on how the gratuity planning should be. And what employers and their workforces must do. (Government departments in the UAE have already made such a transition happen.)

It will also mark the switch from ‘defined benefit’ – which is how the current gratuity regime works to a ‘defined contribution’, where the final end-of-service payout is based on how much is also being put in by the employees directly.

Mohammed Qasim Al Ali, Group CEO of National Bonds, is ready to take on the growth chances created by UAE's upcoming pension planning reforms. Image Credit: Gulf News Archive

Last year, National Bonds had launched a ‘Golden Pensions Plan’, which is many ways helped create awareness of the changes to the UAE pension planning program. It ended 2023 with 34,000 employees signing up for it.

The Plan was also one of the drivers behind National Bonds’ investment portfolio hitting the Dh14 billion mark at the end of 2023. A sizeable Dh6.4 billion came by way of new sales.

“What we also saw was that regular savers in our schemes were becoming more disciplined in their monthly contributions to their pension planning,” said Al Ali. “That meant we saw a 122 per cent increase in direct debits – which are done monthly – from these regular savers.”

More 'group schemes'

Once the pension fund is launched, National Bonds plans to introduce more niche group schemes to the market. "These schemes would target professionals such as doctors, for instance, who have higher disposable incomes and by extension, can also set aside more savings," said the CEO.

"The UAE's pension or end-of-service planning space will be in for a major change. We want us and those who sign up to our funds to be ready."