- September 20, 2020
- Posted by: Administrator
- Category: Business News
Dubai International Financial Centre’s (DIFC) employee workplace savings scheme (DEWS) has been hailed a huge success, just seven months after being launched.
And investment adviser Mercer has revealed strong interest to see the initiative repeated across Dubai and the wider UAE.
in February this year, DEWS restructured the previously defined benefit end of service gratuity scheme into a funded and professionally managed, defined contribution savings plan.
The initiative also offers employees the ability to make voluntary savings into DEWS.
Since its launch the scheme, which gives employees the option to invest in one of five plans graded by risk, currently boasts assets amounting to $73 million.
As July 31, there were 1,135 employers enrolled in DEWS, representing 17,567 active employees. While 633 employees gave consent to have their pre-existing end of service gratuity transferred into DEWS.
Some 80 percent remain invested in the Low Moderate Growth Fund (the default fund), more than 17 percent actively chose to move into the higher growth funds, while just over three percent moved into the low growth (cash type) fund.
John Benfield, head of wealth at Mercer and who is the lead on DEWS, told Arabian Business: “. This is pioneering. This is the first time on this kind of scale that we’ve seen savings plans being put into place into the DIFC.
“I think it really bodes well for the future. Everybody’s been very happy with the performance.
“It replicates what they might have got if they got inflation adjusted returns with end-of-service. It’s done that three or four-fold. It means that overall it’s in for a strong, longer-term performance.”
Employers are required to make a minimum contribution of 5.83 percent of an employee’s basic salary with less than five years’ service. The minimum contribution increases to 8.33 percent of an employee’s basic salary for five years or more of service.
Claudia Maldonado, principal at Mercer Financial Services, said: “This is just a part of the longer-term journey to retirement.
“In terms of the employee engagement, we have to foster a savings culture because when they leave here they’re not prepared for their long-term financial security. And when they return to their home countries, often they cannot depend on the social security or the state pensions, they’ve been out of it for too long.”
Over 1,100 companies have signed up to DEWS savings plan
And she revealed strong interest in the scheme from outside DIFC.
“Importantly, the end of service was never intended for a retirement, it was really just intended to help employees leave the UAE,” she said. “Now the question is how can we change it and make it more relevant today and make it more fit for purpose for the population that is here and the needs that are here. Those discussions are starting and I think it’s very positive.”