The End-Of-Service Gratuity Scheme Will Be Improved And Enhanced In The UAE
Employees in the UAE receive pension, retirement benefits and health insurance as the compensation for years of service. However, experts say the government should create a pension fund. The pension fund ensures permanent benefits for retiring employees.
Lawyer Barney Almazar has said this subject is important especially for the UAE. The reason is that about 90 % of the workforce are immigrants.
He has also said that the income of working expats in the UAE is not secured. The reason is that they are not in their own country. So, they cannot contribute to social security services. When they are in the UAE, they cannot rely on their countries’ benefits. For these people, a secured source of income is very important.
Experts have suggested a new system to solve these problems. In fact, the system offers to establish an investment fund from the companies. It is optional and it will help employees secure the future.
He pointed out that with implementing this, the company and the employee both can receive a retirement fund. The program includes post-employment healthcare for retired people.
Legal experts and financial analysts also have said that gratuities are not just bonus. The reason is that they are not enough to cover the expenses of retired employees.
Prasanth Manghat, CEO of NMC Health, has said that many UAE residents rely on their gratuity for their retirement. The new system helps them fund their retirement and cover their expenses. Plans like this will help elderly people support their healthcare needs.
As the UAE government has announced, it plans to improve and enhance the scheme of end-of-service gratuity.
Dr. Abdulrahman Abdulmanan Al Awar, director-general of the Federal Authority for Government Human Resources, believes this is a very good idea. He has said that due to some reasons implementing this idea is an urgent need. The reasons include global technological advancements, increased retirement age and increased years of work. Given all of these factors, it will be an excellent opportunity for retired people to manage their retirement.
During an interview with Khaleej Times, he said their goal is to shift the traditional way of thinking. It does not need to be done in governmental level. But companies and organizations should provide it as an option for employees to invest for their future.
Almazar also noted that according to the UAE labour day, employers are able to maintain their own pension scheme. Based on this scheme, employees will be given the option to receive a pension provided by the company.
Besides, he said that the government is looking to lessen retirement concerns. This is specially to ensure enough funding and efficient management for the retirees.
Almazar added that a pension fund which is mandatory is absolutely a good idea. Moreover, the management should be transparent in order for availability to be ensured.
However, the nub of the argument is to secure working expats in the future.
The main goal of severance pay is to enable employees to meet the needs of their families after retirement. As well as this, another benefit of this plan is that it provides retirees with a comfortable life.
The reasons why expats need to invest for retirement
> Longer years of service
Given the increased years of service and retirement, and the advancements of technology, this is an urgent need. Also, it is a good opportunity for retired people to manage retirement and take advantage of end-of-service benefits.
> No secured source of income
Another reason for this plan is lack of a secured source of income for expats. As the immigrants are not living in their own country, they cannot use the pension fund of their country. So, it is necessary for these people to secure their retirement and plan for it.
> Can reduce one’s healthcare needs
The new system gives the retirees something more than just a bonus. It also gives them the chance to have enough fund to cover their healthcare needs. Therefore, they will be able to plan for retirement without any concern for twilight years.
According to the above, the government of the UAE has some plans in mind to reduce the concerns of expats. In other words, it is looking to provide a comfortable life for the expats after retirements. Thus, by implementing the new system expats will receive a gratuity that will secure their future.
*most of the information in this article was based on the report of Khaleej Times website