Gulf News, 24 February 2025: The Ministry of Human Resources and Emiratisation (MOHRE) has introduced an innovative optional savings system designed to replace the traditional end-of-service gratuity.

This system empowers employees to enhance their financial well-being by growing their savings through premier investment opportunities, thereby increasing the attractiveness of the UAE labour market.

The initiative, which includes the approval of four investment funds, aims to bolster employee financial security, attract global talent, and stimulate investment activity within the UAE.

Employers begin the registration process by selecting an approved investment fund and signing a subscription agreement.

They then appoint an administrative services intermediary to manage the necessary administrative tasks.

The intermediary is responsible for enrolling employees in the system and opening individual savings accounts.

Employers contribute both basic and any additional voluntary monthly savings, while employees have the option to make lump-sum contributions.

Upon termination of employment, the disbursement of employee savings is straightforward.

Employers notify MOHRE, and employees can choose to either receive their entitlements or continue investing in the system.

Employees also have the option to withdraw their funds, subject to the system’s payout periods, and for voluntary contributions, they may opt for partial or full withdrawal through the administrative intermediary.

Operating on a defined contribution basis, the system ensures that monthly contributions made by the employer are disbursed to the employee at the end of their service.

This initiative not only strengthens the UAE’s economic framework but also provides employees with the opportunity to grow their retirement savings through investment returns.

Skilled workers, in particular, can benefit from higher payouts by selecting high-yield investment options.

The system is accessible to private sector employers, free zone entities, and specific groups such as self-employed individuals, freelancers, non-citizen government employees, and UAE nationals working in both the public and private sectors.

Employers are required to calculate monthly contributions based on an employee’s continuous service period, starting from the date of employment rather than the registration date in the savings system.

Voluntary contributions are capped at 25% of an employee’s total salary.

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