The Federal Authority for Government Human Resources (FAHR) has recently reviewed the best practices in the management of pension funds and end-of-service benefits with leading international expert houses and companies in order to develop a suitable vision and a clear mechanism for the establishment of a savings fund for non-national employees receiving retirement and end- of service compensation .
The issue was discussed at a round-table meeting organized by FAHR at its headquarters in Dubai with regional and international expert houses and leading companies specialized in financial savings management, in the presence of HE Dr. Abdulrahman Abdul Manan Al Awar, Director General of the Federal Authority for Government Human Resources (FAHR) and HE Laila Al Suwaidi, Executive Director of Programs and Human Resources Sector, HE Aisha Al Suwaidi, Executive Director of Human Resources Policies Sector, and representatives of the Ministry of Human Resources and Emiratization.
The meeting came in the light of the recent conference on Work Incentives & End -of Service Benefits (WIESB), held recently in Dubai under the auspices of the Federal Authority for Government Human Resources and with the participation of officials concerned with the management of savings funds and investment funds related to retirement benefits. This was done following an actuarial study prepared by the Authority, under the instructions of the Council of Ministers, in partnership with the Ministry of Human Resources and Emiratization, on the mechanisms and dimensions of establishing a savings fund for non-national employees.
In this regard, Dr. Abdulrahman Al Awar, Director General of the Authority, stressed that the purpose of the round table meeting was to conduct a detailed and in-depth dialogue on some of the issues and points tackled in the study, and to establish these points with practical experiences based on best international practices; in order to come up with an exemplary experience.
He explained out that WIESB study was based on an in-depth research, and was a result of several meetings with the concerned authorities at the state level, including local governments, ministries of Finance and Economy, pension funds, Securities and Commodities Authority, chambers of commerce, economic development departments, and Executive Councils in Abu Dhabi and Dubai.
He further explained that the study was prgressing according to the specified time frames, and would lead to a final vision to be submitted to decision makers regarding the establishment of a savings fund. He stressed that this will strengthen the country's aspiration to be an attractive environment for highly skilled employees from all over the world, through providing opportunities for employees to lead a decent life and enhance their institutional loyalty, especially to private sector companies they work for.
Dr. Abdulrahman Al Awar added: “Setting up investment funds for the retirement benefits of UAE expats will help employees and officials to properly plan for the future by taking advantage of end of service benefits, and utilize their financial resources after retirement. It eill also provide employment opportunities for new generations, or the so-called millennials.
"I believe that the idea of establishing such systems or savings funds for end-of-service benefits in all sectors is an important strategic step and a new experience of its kind in the region. There are successful global experiences in this area, as well as in the UAE."
He pointed out that the establishment of a special fund for retirement benefits and end-of-service gratuity for workers in the UAE will have a great impact on their social and economic conditions and productivity as a whole, according to the study prepared by the Authority. He stressed that the project is in line with the the wise leadership’s directives that workers must be provided with all their entitlements including end of service benefits, positive work environment conducive to happiness, family stability and social well-being.
About the study
According to the study, the fund aims to collect end-of-service benefits so that contributions from employers or institutions will be paid to the beneficiary employee at once, upon retirement or termination, plus investment returns, making the employee a partner in investment decisions.
The study suggests that the competent authorities managing investment and financial portfolios, called "benefit managers", manage the fund, which includes monthly deductions, and voluntary additional contributions of employees, and invest them optimally, to generate financial returns for the benefit of employees, who contribute to investment decisions.
The study sees the savings system to be optional for various government or private institutions, choosing either to participate in the system (fund), or employee end of service. It also suggests that the employee be free to choose taking part in an additional monthly contribution if the employer chooses the savings option, and the employer can provide the system to certain categories of employees, according to their levels, or grades.
The study suggests that the new employee's compensation will be calculated according to the system. For existing employees, their end-of-service benefits will be calculated up to the date of application of the system and will be paid to the employee upon resignation from work, in addition to the company's contributions to the fund, which start the beginning of the system, in the event the employer desires to participate in the fund.