The Dubai International Financial Centre is looking into replacing the end of service gratuity with a funded workplace savings plan for its expat workforce, local news outlet The National reports.
In a letter sent to all DIFC companies and signed by its governor Essa Kazim, the centre is proposing "a trust-based savings vehicle to handle contributions, invest monies and pay benefits" as the gratuity payment is phased out.
"Rather than being paid by their employer when leaving, the plan requires employers to contribute funds into the plan on an on-going basis," a DIFC spokesperson told The National. "The contribution rate will be the same as the current gratuity accrual rate. However, employees will be allowed to contribute additional funds out of their salary, if they so choose."
Rather than being paid by their employer when leaving, the plan requires employers to contribute funds into the plan on an on-going basis"
DIFC said the letter titled ‘Rethinking End of Service Benefits: DIFC survey' is a key part of its consultation phase and dependent on feedback it aims "to go live on January 1, 2020".
"The DIFC established a Working Group over two years ago to examine the various options available for reform of the end-of-service-gratuity. Implementation is on-going and will incorporate feedback from our partners in the centre," the spokesperson added.
The UAE is looking to "enhance and improve" the end-of-service benefits awarded to employees to help companies attract and retain talent and ensure firms can adequately fund the liability, according to the government. Nearly 60% of UAE workers depend on gratuity payments to partly of fully fund their retirement, according to a study from Old Mutual International and Quilter Cheviot.
Jersey has launched a new product to enable multi national and international companies to set up savings plans in the jurisdiction for non- resident employees.
2.5% widely expected
Basic state pension increased 41% since policy inception