End of service benefits (EoSBs) in the UAE is evolving as government and regulatory authorities are pushing local companies for reform when it comes to workplace savings plans.
75% of companies do not set aside ‘ring fenced' assets to cover their EoSB liabilities and make these payments from their operating cashflow, according to a study by Zurich in the Middle East and Insight Discovery. Of those that do set assets aside, 78% do not make these visible to employees.
Furthermore, over half of invested assets are held in cash meaning that investments do not keep pace with inflation and there is a clear mismatch between the short-term asset and what should be a long-term strategy.
Feedback from financial executives in the region reveals a real need for funded and professionally-managed, defined contribution plans that incorporate a voluntary savings component for employees"
However, various government bodies have been looking for ways to improve the EoSBs system - particularly in the United Arab Emirates (UAE). 81% of survey respondents believe that mandatory funding requirements for EoSB would be a positive change.
The ground-breaking DEWS plan which was unveiled earlier this year by the Dubai International Financial Centre (DIFC) is the first of its kind to address this challenge, and is expected to influence further developments in the region.
Zurich in the Middle East has been selected as administrator for the plan and is currently in the process of setting up Zurich Workplace Solutions (Middle East) Limited, a new Zurich subsidiary in the DIFC to fulfil its role and support both employers and employees.
Reena Vivek, from Zurich Middle East said:"Feedback from financial executives in the region reveals a real need for funded and professionally-managed, defined contribution plans that incorporate a voluntary savings component for employees. I am pleased to say that the DEWS plan addresses this need and we are proud to be selected alongside Equiom, a global trust services provider and master trustee of the DEWS Plan and leading global investment consultancy provider, Mercer to bring this solution to life within the DIFC."