“If you look after your staff, they’ll look after your customers.” Richard Branson
There’s no doubt from the research that we have done that people are already staying in the UAE longer than they were a decade ago. If you spend 10 years here, that could be 25 percent of your working life – years you’ve also not been accruing social security benefits in your country of origin.
From an employer perspective, longer service means higher End Of Service Benefits (EOSB) liabilities. If we take a AED30,000 a month basic salary, over 10 years the (EOSB) entitlement would exceed AED250,000. With length of service increasing, entitlements are a big hit against a company especially if two or three individuals leave at the same time.
On 1stJuly 2016, a new law was introduced that requires organizations in the UAE to apply International Accounting Standard 19 (IAS 19), to account for their employee benefit programmes including the (EOSB). It is important for companies to understand the impact on the way their end of service funds are accounted for and IAS 19 also brings to the fore the need for companies to put in place funding programmes.
The current gratuity scheme is arguably well past its sell-by date. It was initially designed to fund an employee’s return to their home country, not as a retirement plan. But with people staying for longer there should be a more robust solution. The combination of:
Increasing EOSB liabilities
Changes in legislation and
Desire to recruit and retain the right talent, has resulted in progressive employers looking to enhance their benefits proposition in line with more developed markets.
Here in Dubai, for every year worked, there is indeed a small allowance accrued, but have you actually sat down and calculated what it is worth? In fact, after 26 years of working for the same company, you will get the maximum 2 years’ worth of basic salary. Note the word “basic,” for housing allowance and any other benefits are not included in the calculation. Now, your life expectancy in retirement is 25+ years and you have 2 years of base salary as an income. What are you going to live on for the other 23 years?
It’s understandable to put off making these decisions, especially as we were never taught in school how to plan for our financial future. Working together, I’ll help show you how to look at this from a different perspective and put a strategy in place designed to work for you. What is important is that you make a start.
Working closely with Nikki Ferguson of Q&A People Matter and your own HR resources, we’ll prepare a strategy to establish what the employees consider important, identify cost effective solutions and deliver via workplace workshops and office champions. Crucially, we’ll onboard new starters and provide advice clinics at regular intervals for employees to confidentially ask questions / seek advice.
I will make complex financial issues easy to understand
I help international workers and expatriates plan their finances. Providing unbiased and independent financial advice, I work with many of the world's major Banks and Financial Institutions covering many areas. I offer a free consultancy meeting lasting 1.5 hours in which we can review your current financial circumstances and suggest options to you that are designed for your money to work harder for you, and in a tax efficient way.