Dear Ministerial Cabinet Resolution 96,
Sorry, we’re a month late for your first birthday which was on 24 October 2024 but we’re here to wish you a very happy belated birthday! May your journey continue with success, growth, and greater achievements in the years ahead.
We are taking this opportunity to reflect on your first year, and send you our good wishes for the months to come.
Your First Year
It is fair to say that your arrival in October 2023 took many by surprise. And so, it took some time for people to understand what your coming meant for them, and their business. However, some Fund Managers were quick to embrace you, and over the past year, we saw four notable players stepping forward to announce their offerings:
Daman Investment
Lunate
National Bonds
First Abu Dhabi Bank (FAB)
However, it takes more than just Fund Management to launch a successful End-of-Service Benefits (EOSB) Savings scheme – it also needs (a) Fund administrators, (b) Custodians, (c) IT providers, and (d) scheme administrators. And of course, (e) distribution networks, as the new scheme has to be explained, marketed and sold to the wider public.
While the four Fund Managers have not yet fully revealed their operational ecosystems, we know snippets of information: for example, FAB has partnered with Apex as its Fund Administrator and Deutsche Bank as its Custodian. There are also hints that Zurich Workplace Solutions (ZWS) and its IT partner Smart Pension may make an appearance on the mainland, building on their experience of administering the DIFC’s DEWS scheme.
We also know that the four announced schemes are still working hard to get their respective solutions fully market-ready.
Looking ahead: Your Second Year
As you step into your second year, we hope you:
Engage more players. It is of course encouraging to see that there are already four Fund Managers working on solutions, however, what about the others – like insurance companies and big international fund managers? Their entry would bring interesting offerings to the market and boost competition. No doubt there are discussions underway, and we look forward to announcements about new players in the coming months.
Broaden the investment choices. So far, we note that all four Fund Managers are centred around the capital guaranteed fund. While this is a solid start, a robust scheme requires variety. We believe there needs to be at least half a dozen funds to choose from, mirroring the different risk appetites and investment preferences. We hope to see in your second year, more funds, and greater choice.
See your first live clients. We have yet to see a fully functioning proposition and first clients using any of the launched plans. We discussed in previous articles the merits of being an “early adopter” – we believe that some firms will be trying this out, however, it will be more like a trickle rather than a flood. We look forward to seeing the first live clients, and their employees’ reaction to the new scheme.
Consider some enhancements. We note that you (the regulation) have not changed so far. Yet, it is already clear that there is scope for improvement to become even better, and more attractive. For example:
The possibility of allowing employees to select approved funds across all approved Fund Managers, instead of just a single Fund Manager.
The possibility to offer international funds through feeder fund structures – at least temporarily, until international Fund Managers localize their operations.
Clarity on what will happen to the DIFC’s EOSB Savings scheme.
Congratulations and best wishes
Dear Cabinet Resolution 96, you have seen and done a lot during your first year, congratulations! While you have accomplished much, we know that you are still a baby, and much more lies ahead for you.
As you grow, we’ll be here to celebrate your milestones, share updates, and support your progress. Once again, happy belated birthday!
Sincerely,
Pensions Monitor
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