Savings Plan Launched to Secure UAE Employees’ Post-Retirement Life

With the economic crisis induced by Covid-19 bringing focus back on employees’ welfare, AXA Green Crescent Insurance Company has developed a first-of-its-kind workplace savings product to protect the financial well-being of UAE workforces and secure their post-retirement life.

The newly launched Employee Secure Saver gives businesses the option of providing their employees with a simple and transparent savings vehicle which is in line with those offered globally. The product also gives employers the flexibility to tailor it to their organizational needs in order to offer enhanced benefits to their employees when they retire.

A 2020 UAE Security and Savings survey by Mercer found that 45% of expatriate employees neither have any means to maintain a decent standard of living nor a plan to generate income after retirement. Also, 61% had no long-term savings.

Mohamed Seghir, the CEO of AXA Green Crescent Insurance Company, said, “Many employees 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. At the same time, the duration of expatriates’ stay in the country is increasing with minimal provisions made for pensions in most cases. The Employee Secure Saver is designed to help address this gap between required savings and what the end-of-service benefit provides.

This new workplace savings product was created with salaried employees’ aversion to market risks in mind. It includes a market-leading guaranteed investment option that fully protects a participant’s capital and past gains.

Meanwhile, the UAE authorities are also taking pragmatic steps to ensure the welfare of employees. By introducing the DIFC Employee Workplace Savings (DEWS) plan in February 2020, the Dubai International Finance Centre became the first body in the country to overhaul the gratuity system. Employers in the free zone must contribute an amount equal to 5.83 % or 8.33 % of an employee’s wage, depending on their length of service, every month to a fund administered by a trust. Employees can also choose to make additional voluntary contributions to the DEWS plan.

“The future of the current defined benefit model has been on the minds of many in the UAE since the landmark announcement that the DEWS plan will replace end-of-service benefits paid by employers. The Employee Secure Saver provides a solution to close the gap between retirement savings and end-of-service-benefits and encourage employee retention and their welfare,” said David Howard, Senior Strategy Manager, AXA Green Crescent Insurance Company. 

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