The UAE announces the benefits of optional savings as an alternative to end-of-service benefits
The Ministry of Human Resources and Emiratisation has identified eight advantages of the alternative "optional savings" system for end-of-Service Remuneration, This system is one in which the amounts that have been allotted for end-of-Service Remuneration are invested for employees working in private sector companies with leading investment funds, so that it develops employees' savings to benefit from its investment returns, The advantages have been identified by the Ministry.
The ministry made a presentation during the press conference that it recently organized to announce the launch of the new savings system. In the presentation, it stated that the new system contributes to the enhancement of the principle of ease of business, and that it is considered an engine in enhancing the status of the state as one of the preferred destinations for living and working, In addition, it benefits from the robust infrastructure of investment funds and service providers in the system that are licensed to manage end-of-service benefits for electronic government employees.
Other advantages of the optional savings system
The system also improves the focus on business activities, development, and capital building rather than operational matters in the management and disbursement of end-of-service bonuses, This results in higher levels of job loyalty among employees as well as increased levels of satisfaction with their work and increased levels of productivity on the job.It will cost the employer less in the medium term to join in the savings system, and this cost will be less than the cost of the end-of-service bonus that is currently being given out.
The system also offers a variety of savings opportunities for the development of workers' dues and savings to ensure proper financial planning and family stability for their families and benefit from their investment returns, In addition, there is the possibility of increasing the end-of-Service bonus for a skilled worker if he chooses high-yielding investment portfolios or through paying an additional subscription if the citizen and resident worker wishes to participate optionally. Both of these options are available.
Increase staff awareness and planning
One of the benefits is the availability of a voluntary (optional) contribution option inside the system, This option contributes to an increase in employees' awareness and financial planning of their own savings, and it also provides employees the opportunity to continue investing their dues after they leave their jobs, if that is something they would like to do.
The method of participating in the alternative optional savings system, during which the amounts that are designated for the end-of-Service Bonus are invested for employees working in private sector companies with leading investment funds, was explained by the ministry as follows: the employer submits a subscription application, selects one of the licensed investment funds, and pays the subscription for the employment that he wishes to register in the system, with the possibility of rescission. During this time, the amounts that are designated for the end-of-Service Bonus are invested.
Increase individual investment returns for beneficiaries
Increase the individual investment returns of beneficiaries and allow the worker to pay an additional optional contribution, The ministry stated these were two of the four goals of the savings system, The first goal was to support the economic system in the UAE and achieve the protection and well-being of the workforce in the country, The second goal was to increase the attractiveness and flexibility of the labor market supporting workers by upgrading the level of services provided to them, The fourth goal was to protect and well-being of the workforce in the country.