90% of the workforce in UAE are expatriates and shall be leaving the country after a certain period of time or upon retirement. It is necessary that employees are offered end of service and retirement benefits.
Recently, reforms are being issued to boost the retirement benefits scheme. Companies are trying to attract and retain talented employees by ensuring that retirement benefit schemes are adequately funded.
Director General of the Federal Authority for Government Human Resources (FAHR) – Dr. Abdulrahman Abdulmanan Al Awar, mentioned that there are technological advancements and increased retirement age, hence there is an urgent need to establish investment funds to manage the retirement and end-of-service benefits and schemes. He further mentioned that UAE wishes to shift the traditional way of thinking; hence companies should themselves endeavor to provide such funds and not depend on the government to promote the same. Enhanced gratuity and private sector employee saving schemes are some of the ways to improve the existing retirement schemes.
Alternatively, companies may also offer options to cash out gratuity pay every three to five years, which will manage their cash flows in a better way. These funds may also benefit small companies who usually end up in a scenario where they are unable to pay end of service benefits to their employees due to less cash flow and liquidity in the company.
The above steps are being promoted by the UAE government in order to attract the best talents in UAE and retain them as UAE does not have a minimum wage policy. These schemes shall definitely lead to a high-quality retirement scheme culture.