Since the UAE’s new alternative End-of-Service Savings scheme was announced last year, many fund managers, banks and insurers have been racing to structure and launch a compliant product offering. The question was: Who would be the first to market?
This was recently confirmed. Congratulations to Daman Investments PSC (Daman Investments) and Lunate Capital LLC (Lunate) for becoming the first two accredited fund managers, Dubai- and Abu Dhabi-based respectively, to offer the voluntary EoSS scheme in the UAE.
For now, the accreditation by MoHRE and SCA allows Daman Investments and Lunate to launch two savings funds offering capital protection – one conventional and the other Sharia’h compliant. Daman Investments has confirmed that the terms for the capital guarantee funds have been strictly defined by MoHRE and SCA as set out below:
The scheme is currently open to both mainland AND freezone companies with a minimum of two employees to be enrolled. This is an interesting development with MoHRE now taking the lead as the primary regulator for EoSS-related matters of freezone companies as well as employees that would otherwise be under the purview of the respective freezone authorities.
The enrolment process can take between 5-15 days involving KYC verification, MoHRE approval and opening of an EoSS account with an approved custodian bank.
Once approved by MoHRE, the minimum enrolment period for the employer is one year. Exit from the scheme thereafter will require a NOC from MoHRE as stipulated by the rules of Cabinet Resolution 96.
Employees cannot directly enroll themselves but must be routed through their respective employers.
End-of-Service Benefit accumulated up to the date of switchover can also be transferred to the funds if so desired by an employer.
In addition to the defined contributions by employers (basic subscriptions), the scheme allows enrolled employees (skilled and unskilled) to voluntarily contribute an additional amount up to 25% of the monthly basic salary (or in case of a lumpsum, 25% of annual salary) into the funds giving employees easy and low-cost access to regulated funds for additional (voluntary) savings.
Employers that register with Daman Investments will be granted access to a portal for management of EOSS accounts while employees will be able to view their statements and monitor the performance of their funds.
“Market interest has definitely picked up with a number of large corporates in early discussions to understand our offering. Many have requested to arrange training sessions for HR teams as well as employees which we are currently rolling out” said Sachin Venkataraj, Wealth Manager at Daman Investments.
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