In this article, you will learn about:
- The new UAE Golden Pension Scheme launched in October 2022
- Why this initiative is being introduced to the region
- The impact this will have on local businesses
The UAE has once again moved to build an even greater appeal around working in the country, with a newly introduced Golden Pension Scheme rolled out to employees of registered corporates with retirement planning this month.
The Golden Pension Scheme is aimed towards employees who are looking at saving for their future. It is something of an employment insurance scheme, allowing employees to accrue a savings pot while they work in the UAE.
Backed by the Investment Corporation of Dubai that owns the National Bonds of the UAE, the scheme will also look to increase the returns of investors by being locked – only unlockable to employers at the request of the corporates .
What is the UAE Golden Pension Scheme
The UAE Golden Pension Scheme is a long term investment initiative that is designed to build a safety net for employees of registered corporations with retirement planning in the region who have one eye on the future.
While the UAE has come a long way in developing an attractive marketplace for foreign workforce, this hasn’t yet translated into the provision of a country-wide pension scheme that would be adaptable across all sectors and industries.
Each individual that enrolls in the scheme will be given a ‘Sukuk’ – also known as a savings bond, granted by the Investment Corporation of Dubai. Locking the bond allows investments to mature, and generate greater returns over time.
The corporate employee, and overall ‘owner’ of the Sukuk, is granted full visibility over the value of the pension. However, as noted, it will not be at their discretion to withdraw as they please. Dubai Investments Company will take responsibility for the maturity of the pension.
Why Is The UAE Golden Pension Scheme Being Introduced?
The expatriate community in the UAE dominates the market economy considerably. The Golden Pension Scheme itself is said to target 91% of the UAE population, owing to the imbalance between employees and UAE citizens.
Typically true for Western countries, pension schemes are commonplace in many working environments. However, this was something that the UAE had not yet come to introduce to the workplace. While the UAE has led the way globally in many employee initiatives – including the famous 0% tax rate – some would argue that a pension scheme was the missing piece of the puzzle.
What Does The UAE Golden Pension Scheme Mean For Business Owners
The biggest implication of the UAE Golden Pension Scheme is on business owners themselves. Employers in corporate businesses can now contribute in either monthly installments or a lump sum to the Sukuk of their employees – they can also do this on their behalf should they choose to invest. There is also an opportunity to invest the value of an end-of-service benefit, for example, in order for this to mature over time and be of greater value than originally planned.
For corporate employees, they will of course be saving for a later date, however they will have full oversight over what they have accrued.
Nonetheless, it is the responsibility of the corporates only to unlock the benefits of the scheme.
How Do I Enroll In The UAE Golden Pension Scheme
As it is early days in the rollout of the Pension Scheme, many workplaces will be seeking advice from the Investment Corporation of Dubai, and the Dubai Investments Company leading the initiative about how the scheme can be implemented. We advise that you speak directly with your employer about the knowledge they have so far gathered on how the scheme will work for you..
If you are an employer, and you have collaborated with Set Hub in your business setup, you are welcome to reach out to us if you have any queries about the UAE Golden Pension Scheme. We would be more than happy to assist you in understanding how you can successfully implement the new scheme in your place of work, should it be a requirement for you.
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