In early 2019, the UAE government has announced that it will enhance and improve the end-of-service gratuity scheme. Gratuity, together with pension, retirement benefits and health insurance represent forms of compensating employees after several years of service.
According to from the experts, although current labor legislations provide importance for mandatory end-of-service benefits, a need to create a pension fund will ensure continued benefits for retiring employees. A mandatory pension fund will be ideal since 90 percent is the workforce are expatriates here in UAE. To do this, both the company and the employee can contribute to a retirement fund, as well as some provisions and post-employment health benefits.
One expert says that since the majority of UAE residents depend on their end-of-service gratuity payment to fund their retirement, this idea will help to fund the retirement gap between the gratuity payment and retirement costs.
According to Dr. Abdulrahman Abdulmanan Al Awar, director-general of the Federal Authority for Government Human Resources (FAHR): “With the accelerating global technological advancements and the increased retirement age and years of service, there is an excellent opportunity and an urgent need in the region to establish investment funds to manage retirement and end-of-service benefits.”
For this idea to be successful, a mandatory pension fund shall be established and the management of the fund must be transparent to ensure availability in the future.
Expat employees need to protect their future. Here are some of the reasons why expats need to invest for retirement: a. Longer years of service; b. No secured source of income in the future; c. it can address one’s healthcare needs.
The purpose of severance or gratuity pay is to assist employees to be able to provide the needs of his family during the period of unemployment or retirement while pension benefits ensure that the retiree can live a comfortable life.
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