The DIFC Employee Workplace Savings Plan had been in effect for a year. It reflects a lump sum paid at the end of service and employer makes recurrent contributions as part of end of service benefits.

Since its launch on February 1, 2020, the initiative has enrolled 19,182 DIFC employees from 1,187 licenced companies. The DEWS plan holds $127 million in assets, including $4.4 million in gratuities paid to members who left the DIFC.

DEWS?

Gratuity or end-of-service benefits are provided to workers in Dubai and around the UAE as a lump sum. It's determined by the employee's final minimum wage, contract type and years of service. Gratuity is paid annually by the employer in DIFC under DEWS and goes into a trust that is under the independent legal ownership of a master trustee (Equiom) and is controlled by a financial regulator. An administrator Zurich Workplace Solutions, oversees the trust's assets.

Key differences between DEWS and traditional UAE gratuity plans:

1. Monthly payments rather than a lump sum payment

2. Gratuities are spent as soon as they are earned by the fund.

3. Instead of using the final minimum wage, the gratuity contribution is measured using the latest monthly salary.

4. Employees may also contribute to the fund on a voluntary basis, which is deducted and transferred from their paycheck during the payroll process.

Gulf News speaks with Reena Vivek, Senior Executive Officer, Zurich Workplace Solutions. We now have a vision in the UAE to draw expat staff and [global] talent. We are also encouraging people to stay here with longer-term visas and retirement visas.”

Zurich Workplace Solutions (ZWS) is the fund's day-to-day administrator. It oversees all incoming deposits, new enrolments, investments, withdrawals, and employee records. Employees and employers can display and control the funds through ZWS.

DIFC took the first initiative by forming a working committee, which was nearly three years. They appointed a trustee, administrator, and investment advisor.

Employers must contribute a minimum of 5.83 percent of basic salary (for less than 5 years of service) and 8.33 percent of basic salary (for more than 5 years of service). They are paid into the fund based on current basic wage.

Investing one's gratuity is a relatively new idea for Dubai's workforce, which already has a wide variety of ages, income levels, backgrounds, and financial expertise. Mercer, DEWS' financial advisor, develops and offers investment options that should be regarded as a long-term retirement investment plan.

Mercer further created five funds specifically for the DEWS scheme. The funds are initially invested in a default fund, but workers can use the DEWS platform to transfer their money into a different investment option. Until an employee makes a switch, the portal explains the costs and risks associated with each investment fund. He keeps a close eye on the output of these funds, appointing each its own fund manager. On a regular basis, those underlying fund managers are amended, transferred or replaced to ensure that they are actually providing a certain standard of results to the members.

According to Zurich Workplace Solutions' official website, the six funds are:

 • Low Growth Fund

• Low/Moderate Growth Fund

• Emirates NBD Islamic Money Market Fund

• Low Growth Fund

• Moderate/Large Growth Fund

• High Growth Fund

From April 2020 to January 2021, the default fund increased by 17.9%. However, it will be a few years before an estimated rate of return for this and other funds can be calculated.

Employees have two choices at the end of their employment: either retain the funds invested in the scheme for future development, or withdraw the entire amount in their own name. They will progressively build up their overall benefits to withdraw and use as a lump sum at the end of their service with voluntary contributions as savings and the growth rate.