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09 December 2023

UAE launches an optional savings system as an alternative to end-of-service benefits for residents

By E247

UAE launches an optional savings system as an alternative to end-of-service benefits for residents.

The new system will allow employers to save and invest the end-of-service bonuses of their employees in private sector savings and investment funds supervised by the Securities and Commodities Authority in coordination with MoHRE.

Participation in the system is optional for both employers and employees, and citizen employees are eligible to participate. The employer will pay the financial contribution on a monthly basis, and the employee can add to the monthly amount, up to a maximum of 25% of their monthly salary.

The goal of the new system is to preserve workers' savings and ensure that they are invested safely to guarantee their rights and achieve stability for their families. The system also allows government sector employees to participate in it for the purposes of saving and investing.

His Excellency Dr. Abdul Rahman bin Abdul Manan Al Awar, Minister of Human Resources and Emiratisation, said: "The launch of the alternative end-of-service bonus system is part of our efforts to enhance the well-being of workers in the UAE and provide them with a secure financial future. The new system will offer workers more flexibility and choice in how their end-of-service bonuses are saved and invested."

The new system is expected to benefit both employers and employees. Employers will be able to reduce their financial burden of paying out end-of-service bonuses in a lump sum, and employees will have access to a variety of investment options to grow their savings.