Companies in the UAE now have the option to introduce a variety of pension plans into expatriate employee packages to help efforts to retain and reward top talent.
National Bank of Abu Dhabi, the capital's biggest lender, hopes that managed pension funds involving employer contributions will provide an attractive alternative to salary increases for companies facing soaring staffing costs.
The service "provides the employer a tool to remunerate and retain employees for their loyalty and commitment towards the company but also provides the employee a way to save for the future," said Samira Zakour, the chief marketing officer of NBAD Trust Services, which will oversee the plans.
The plans are similar to the 401(k) retirement savings account in the United States or defined contribution pension schemes, with companies expected to contribute towards employees' savings and investing them via a fund manager.
The Emirates has no specific laws governing pension contributions, which are mandatory in many developed countries, but retiring employees are instead provided with end-of-service or gratuity payments that are capped at a maximum of two years' wages.
UAE nationals' pension needs are provided for by the General Pensions and Social Security Authority.
The end-of-service payments leave expatriate employees, who are forced by law to stop working at the age of 65, with lump sums to fund their retirement.
"That really isn't going to be enough to retire on," said Nigel Sillitoe, the chief executive of Insight Discovery, a market research firm. "There's always a risk … that if the company goes belly up, you're not going to get a dime."
The pension plans on offer would be managed externally in an individual's name, avoiding this issue.
The plans would also provide NBAD with a means to grow its assets under management from Dh5 billion (US$1.36bn) at present, while it may also help to boost UAE market liquidity by channelling money that is typically spent or saved elsewhere into local and regional securities. The bank's asset management arm will also invest its pension plans globally.
NBAD said it was targeting Abu Dhabi companies in sectors including aviation, oil and gas and banking to sign up for the schemes. The bank would be quickly followed by other financial firms seeking to tap burgeoning numbers of corporations and family offices seeking to better manage gratuity payments, Mr Sillitoe added.
Falcon Private Bank said last year that it would seek to develop expatriate pension plans similar to those being proposed by NBAD.
Other companies have also sought to address employee retirement costs through other means, such as SEI Investments and Ryland Gray, which were appointed by Serco, the services company, to manage end-of-service liabilities.
In spite of tax-free incomes and generous "expat packages" that include perks such as housing and car allowances, UAE companies have found it hard to compete with developed markets to retain talent, with companies generally unwilling or unable to offer share options or other long-term incentives and plumping for higher cash salaries instead.
Base salaries, not accounting for allowances, bonuses and other perks, are expected to increase by an average of 5 per cent this year as companies strive to retain employees, according to a study by the recruitment group Robert Half.
The schemes would provide "a very valuable new tool to enable those employers to achieve and process a well-balanced remuneration strategy, which thus far this region has lagged by a little bit," said Simon Stirzaker,the senior manager for development and strategy at Royal Bank of Canada, which administers the pension plans on behalf of individuals. NBAD will be the trustee and the asset manager.
ghunter@thenational.ae
Brief scores:
Southampton 2
Armstrong 13', Soares 20'
Manchester United 2
Lukaku 33', Herrera 39'
England's lowest Test innings
- 45 v Australia in Sydney, January 28, 1887
- 46 v West Indies in Port of Spain, March 25, 1994
- 51 v West Indies in Kingston, February 4, 2009
- 52 v Australia at The Oval, August 14, 1948
- 53 v Australia at Lord's, July 16, 1888
- 58 v New Zealand in Auckland, March 22, 2018
Mumbai Indians 213/6 (20 ov)
Royal Challengers Bangalore 167/8 (20 ov)
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
Bullet%20Train
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20David%20Leitch%3Cbr%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Brad%20Pitt%2C%20Aaron%20Taylor-Johnson%2C%20Brian%20Tyree%20Henry%2C%20Sandra%20Bullock%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
more from Janine di Giovanni
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Jewel of the Expo 2020
252 projectors installed on Al Wasl dome
13.6km of steel used in the structure that makes it equal in length to 16 Burj Khalifas
550 tonnes of moulded steel were raised last year to cap the dome
724,000 cubic metres is the space it encloses
Stands taller than the leaning tower of Pisa
Steel trellis dome is one of the largest single structures on site
The size of 16 tennis courts and weighs as much as 500 elephants
Al Wasl means connection in Arabic
World’s largest 360-degree projection surface
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
