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Foreign government workers to benefit from new saving scheme

Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum approved the launch of the scheme Creative Commons
Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum approved the launch of the scheme

A new savings scheme for foreign employees working in Dubai Government, which aims to enhance the end-of-service benefits system, is set to come into effect on July 1.

Dubai International Financial Centre (DIFC), the entity responsible for supervising the implementation of the Savings Scheme for Foreign Employees in the Government of Dubai, has held several virtual town hall meetings with senior executives to discuss the implementation plan. 

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, and chairman of The Executive Council, approved the launch of the scheme in March with the aim of attracting and retaining talent by providing an integrated system that offers various savings opportunities for employees to secure their present and future. 

The scheme, which was conceptualised after the DIFC Employee Workplace Savings (DEWS) plan, targets expatriates in Dubai government entities in the first stage, with the scope of expanding its implementation in later stages. 

When DEWS was launched in February 2020, it was the first scheme of its kind in the region and reformed the end-of-service benefits regime for people working in DIFC, aligning with the international retirement savings standards. 

The scheme has since grown from strength to strength, both in size and performance, despite the onset of Covid-19 almost immediately after the scheme’s introduction.

Global professional services provider Equiom will act as the master trustee of the scheme and the independent legal owner of contributions made by employers, while ensuring that its beneficial interest lies with employees. 

Zurich Workplace Solutions will support employers and employees through the administration and management of the plan.

Investment services provider Mercer will provide independent investment advice to the master trustee of the scheme.

How the savings scheme works

Joining the scheme will be by default for foreign employees working in government entities, subject to Law No (8) of 2018 in relation to the management of human resources for the Government of Dubai, according to job grades and over successive time periods.

The employer and the Department of Finance will lead this. 

The employer will contribute the total end of service gratuity to the scheme, starting from the date of joining the scheme, without including the financial dues for previous years of service to which current legislation applies. 

The percentage of the contribution to the scheme will equal the end of service benefits due to the employee.

In the event that the employee is promoted or has changed his role, a change in contributions will become effective.

The rate of return will depend on the amount invested by the employee, how it is distributed across available investment portfolios, and the risks associated with it. 

Employee participation in the scheme will stop upon the end of their service. At this point, employees have the right to withdraw their entire end of service gratuity amount, or can choose to remain in the scheme, should they desire to.

In addition to the end of service gratuity that the employer is mandated to pay, the employee can make personal contributions to the scheme if desired and has the right to add or withdraw any personal savings from the scheme at any time.

The scheme will provide several investment portfolios with varying returns and risks, as well as Islamic Shariah compliant portfolios.

All employees will be enrolled by default in the capital protection portfolio, at which point they have the right to choose their preferred investment portfolio approach.

The employee can deposit all savings in one investment portfolio and also has the option to choose several investment portfolios at the same time. 

For example, employee A can deposit 100 percent of the savings in a medium-risk portfolio, while employee B can choose to deposit 30 percent in a high-risk portfolio, 30 percent in a medium-risk portfolio, and 40 percent in a low-risk or capital protection portfolio.

What officials saying about the scheme

Abdulla Al Basti, secretary-general of The Executive Council of Dubai and chairman of the scheme’s steering committee, said: “The savings scheme ensures financial security, fortifies employer-employee relationships, and most importantly, presents a robust opportunity for expat employees looking to invest their savings.

“The scheme is one of many initiatives that have highlighted the government’s commitment to ensuring employee satisfaction, in appreciation of their efforts and dedication.

“With the scheme in place, Dubai will continue to be an attractive career destination that appeals to outstanding talent and a preferred destination for personal and professional stability.”

Alya Hussain AlZarouni, executive vice president – operations, DIFC Authority, said: “Expanding the DEWS plan across the Dubai government entities supports the emirate’s vision to be a leading hub for talent.

“This comprehensive savings plan is utilised for retirement planning and aligns with global best practices.

“The approach is a first for the region and over time, we expect other cities and countries to adopt a similar approach in the coming years.

“Together with industry leaders such as Equiom, Zurich and Mercer, we will continue to provide a best-in-class offering, reforming the workplace savings landscape.”

Mohammad AlHawi, director of policies and strategies – economic development at the General Secretariat of The Executive Council of Dubai, said: “The scheme will contribute to strengthening Dubai’s position as a global financial centre, which is recognised as an incubator for expertise and competencies from around the world, in accordance with international best practices.

“This is in the interest of the workforce and its development within an integrated system that enhances the attractiveness and flexibility of the labour market in the emirate.”

Iman Saleh Bin Khatam, director of policy and program support of Dubai Government Human Resources Department, said: “The savings scheme will enable employers to manage and fund the end-of-service benefits efficiently while offering foreign employees a way to save and invest with confidence.

“With DEWS, we empower employees to take control of their financial future.”

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