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23 July 2024

Pension plan for Dubai expats by year-end

By Staff

Dubai has completed a feasibility study for an ambitious pension fund for expatriates and is in touch with relevant departments before launching it by the year end, an official was reported on Sunday as saying.

The Department of Economic Development in Dubai (DED) is working on the project which will cover both public and private sector foreign employees, making Dubai the first city in the region to create a pension fund for expatriates, who do not pay income taxes in Dubai and other emirates.

“We have finished the feasibility study for the project and DED are now consulting with local and federal parties…we are also coordinating with some parties in other emirates and are planning to hold workshops on the project,” said Ali Ibrahim, deputy director general for planning and development at DED.

“You can say the project is nearly ready…once we complete negotiations with other departments, we will seek government approval so the project can be launched by the end of the year,” he told Albayan newspaper.

He said the project would be implemented in stages, adding that it could first cover employees in large companies and public establishments.

He said the first phase would also include companies which already provide pension to its expatriate employees.

Asked whether such fund could involve all UAE, he said:”I think it is better to be implemented on the federal level….after Dubai took the lead in this project, I believe there is now a trend to set up a federal pension fund…this one requires the support of relevant departments, including the Ministry of Labour.”

In a recent statement, DED said the pension fund project is part of several ideas being considered by the Department to spur investment and make Dubai a more attractive place to do business and live.

In a report early this year, Emirat Alyoum Arabic language daily quoted officials and experts as saying the pension fund would give a strong push to the market as it will expand liquidity, boost investor confidence and improve living standards.

“There is no doubt the proposed pension system will ensure financial and social stability and create sufficient guarantees for expatriate workers in the emirate…this will in turn increase confidence in the domestic economy,” said Aref Al Muhairi, executive director of the Dubai Statistics Centre.

“I believe it will also boost domestic liquidity and this will give a push to business in the emirate…as for the sum that will be taken off the salary for the pension fund, I think it will be in line with international levels.”

Muhairi said he did not know whether the fund would be compulsory but added there would be several options for the Dubai government.

“However, I believe that making the fund mandatory will bring many benefits to expatriate workers, reduce their financial disputes and tackle end of service problems…this will contribute to easing pressure on courts….I am confident that this project will be highly successful as is the case in pension funds in many European states.