UAE unveils 'three investment option' private sector scheme to replace end of service regime

The UAE Cabinet has announced a new voluntary retirement benefits system for employees in the private sector and free zones to be overseen by the Securities and Commodities Authority in partnership with the Ministry of Human Resources and Emiratisation.

Sheikh Mohammed, who led the cabinet meeting said in a statement on 4 September that the voluntary initiative would include the establishment of savings and investment funds from the private sector with the aim to "protect workers' savings and ensure they were invested safely".

He added that through these funds, employees could invest and save their end-of-service gratuities according to various investment options.

The full details of the proposals were not revealed in the statement, however the three investment options were reported by local media to be: Risk-free investment that maintains capital; risk-based investment where the risk varies between low, medium and high; and the sharia-compliant investment.

Companies taking part will be expected to pay a monthly contribution under the scheme.

At the end of service, employees will receive the savings and returns they have accrued from investing in the funds.