Equiom and Zurich to run new DIFC investment scheme set to replace gratuities
While Equiom is the master trustee, Swiss insurer Zurich is the plan's administrator
Dubai International Financial Centre appointed a master trustee and scheme administrator to oversee its new low-cost investment platform that will replace the end of service gratuity for all employees in the free zone from January 2020.
Equiom, a global trust services provider, is the master trustee of the DIFC Employee Workplace Savings (Dews) plan with Swiss insurer Zurich Middle East selected as the scheme administrator. Global consultancy Mercer will assist Zurich as the scheme's investment adviser, and Smart Pension, a defined contribution master trust pension scheme for UK employers, will act as the technology services provider.
"The new Dews scheme will reinforce our position as a jurisdiction that attracts and retains the very best professional talent from across the globe in accordance with best practice, including employee benefits," said Arif Amiri, chief executive of DIFC Authority, in a statement on Sunday.
The National reported the DIFC’s intentions to replace the end of service gratuity with a funded workplace savings plan for its expatriate workforce in March. The changes make the DIFC the first body in the UAE to overhaul the current gratuity system - a defined end-of-service benefit that all expatriate employees are entitled to after completing at least one year of service.
DIFC said the new plan, set to roll out from January 2020, will offer a low-cost investment platform for mandatory end-of-service contributions by employers as well as added voluntary savings by employees.
The financial hub, set up in 2004, said companies based in the free zone will know exactly how much they owe employees at any given point, without any liability once the contribution is paid.
The new scheme will ensure cash flow requirements are smoothed out over the employment cycle of an employee by calculating an employee’s end-of-service gratuity based on their salary as and when they fall due, and not when the employee’s service ends. Employees will have better security as they receive the benefit, irrespective of an employer going out of business.
DIFC said the next step will see a Dews Supervisory Board set up to oversee the scheme’s governance and commercial aspects, comprised of DIFC Authority representatives, employer and employee representatives and an independent oversight.
The Dubai Financial Services Authority will oversee all regulatory aspects of the master trustee and scheme administrator’s duties.
Equiom’s first duty was to confirm the selection of the scheme administrator in a bidding process initiated by the DIFC Authority.
Zurich will start the on-boarding process with DIFC employers required to participate in the Dews plan soon.
Employers in the DIFC will be able to opt out of the Dews scheme, provided they offer a qualifying alternative scheme. The guidelines as to what will qualify as a suitable alternative will be provided after September 15.
Updated: August 4, 2019 05:13 PM