UAE’s New End-of-Service Savings Scheme: What Employees Should Know

The Ministry of Human Resources and Emiratization (MOHRE) has introduced the UAE’s Savings Scheme, a modern alternative to the traditional end-of-service gratuity system. This scheme enables private sector companies to invest their employees’ end-of-service benefits in four approved investment funds, offering both companies and employees numerous advantages.

Approved Investment Funds

Under the UAE Savings Scheme, companies can choose from four investment options:

1. FAB Fund (First Abu Dhabi Bank)

2. Lunate Fund

3. Waha Capital’s Waha Investment Fund

4. The National Bonds Sukuk Fund

These funds are designed to provide secure and flexible investment opportunities, helping companies better manage employee savings. By adopting the scheme, companies not only ensure their employees’ financial well-being but also enhance their ability to attract and retain talent.

Benefits for Companies & Employees

The system is advantageous for companies in many ways. For example, it helps reduce costs compared to traditional gratuity payouts, since contributions are made from the basic salary of employees at the time of payment and not at the time of termination when it is usually higher. This also reinforces the company’s image as an employee-centric organization, thereby enhancing loyalty and consequently productivity.

The scheme emphasizes wealth creation for employees while providing steady returns and hence more financial security. Even while in service, employees continue to accumulate these entitlements to make provision after leaving the service, to which they can add further contributions to enhance their savings. Skilled workers can choose preferred investment portfolios, while non-skilled ones are assigned to capital-guaranteed portfolios.

Expanding Eligibility

The scheme is now open to additional groups, including self-employed individuals, freelance permit holders, non-UAE nationals in government jobs, and UAE nationals in both public and private sectors. These groups can now participate in the savings plan and preserve their end-of-service benefits securely.

Overall, the UAE Savings Scheme is a forward-thinking solution that benefits both employers and employees, ensuring long-term financial stability and growth for all.

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