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The UAE Cabinet has approved a new system to boost gratuity benefits for workers in the private sector and free zones to attract talent.
The scheme includes establishing savings and investment funds that the Securities and Commodities Authority will oversee in coordination with the Ministry of Human Resources.
“The aim is to preserve the workers’ savings… and to ensure that they are invested in a safe way,” Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, posted on X, formerly known as Twitter.
The rewards system will be optional for companies across the Gulf state, with workers in the government sector having the choice to participate.
The scheme will have three investment options: risk-free investment that maintains capital, risk-based investment where the risk varies between low, medium, and high, and Sharia-compliant investment. Employees can avail of the end-of-service benefits once their work relationship with the employer ends.
This introduction of this system similarly works as a safeguard for employees as the UAE has no system in place that serves pension.
DIFC’s Employee Workplace Savings Scheme announced in 2020 is the closest there is to a pension fund, as DIFC firms make monthly contributions at the rate of 4.83% or 8.33% of the staff’s monthly basic pay, and employees are given a choice to withdraw the funds or keep them as savings.
On Monday, Sheikh Mohammad shared that the UAE agreed on a new system to deliver rewards and incentives for federal government employees.
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