Abu Dhabi-based AXA Green Crescent Insurance Company (AXA GCIC) has launched a workplace savings plan to assist UAE workers in saving for retirement and improving their financial security.
Employers can use AXA GCIC’s Employee Secure Saver plan to provide workers with a savings vehicle similar to those offered around the world.
Mr. Mohamed Seghir, Chief Executive Officer AXA GCIC remarked that “many in the country remain unaware that end-of-service benefit in the UAE is unlikely to be sufficient on its own for retirement, a life goal that requires careful planning.”
According to reports, 45 percent of expatriate workers either have no means to sustain a reasonable standard of living in retirement or expect to work beyond retirement age to gain enough income. Respondents’ lack of financial awareness was also a problem, with 61 percent saying they had no long-term savings.
Mr. Seghir pointed out that “the duration of expatriate stays in the country is increasing with minimal provisions made for pensions in most cases. Our Employee Secure Saver is designed to help address this gap between required savings and what end-of-service benefit provides.”
The Dubai International Finance Centre (DIFC) was the first body in the UAE to reform the gratuity system, a fixed end-of-service benefit that all expatriate workers are entitled to after completing at least one year of service, when it introduced the DIFC Employee Workplace Savings (Dews) plan in February 2020.
Employers in the free zone are required to contribute 5.83 percent or 8.33 percent of an employee’s salary to a trust fund monthly, depending on the employee’s length of service. Employees may also contribute to the Dews plan voluntarily.
AXA GCIC stated that the Employee Secure Saver plan would have a range of investment options as well as a Sharia-compliant fund to meet the needs of workers with a higher risk appetite as well as those who choose to invest by Islamic values.
Mr. David Howard, Senior Strategy Manager AXA GCIC pointed out that “the future of the current defined benefit model has been on the minds of many in the UAE since the landmark announcement that the DIFC Employee Workplace Savings Plans will replace end-of-service benefits paid by employers.”
Employers can customize the Employee Secure Saver plan to meet individual requirements, such as ring-fencing end-of-service liabilities or to offer enhanced benefits as a differentiator in the employment market.
The UAE Central Bank has approved AXA GCIC’s life insurance products, which comply with the new life insurance regulations set to take effect in 2020.