Foreign workers in the United Arab Emirates are finally able to invest in a competitive, locally-based pension scheme – thanks to the National Bank of Abu Dhabi. The Telegraph is reporting that expats in the country can now invest in corporate trust solutions that are designed to discourage overseas workers from sending the lion’s share of their salaries back home. The Wealth Builder Plan will be administered by the Jersey-based NBAD Trust Company, and it is hoped that the move will attract more people to an economy that is in great need of skilled labour. However, what benefits can expats realistically expect to enjoy from these innovative offshore pensions?
How the New Scheme Will Revolutionise Offshore Pensions
Expat employees will be able to choose from a range of investment fund options according to their appetite for risk. The new pension scheme is, essentially, a packaged portfolio of corporate investments – something that foreign workers in the UAE have hitherto been deprived of. The UAE is one of only a handful of leading financial centres that doesn’t currently offer a government-backed pension facility, so this new initiative is expected to be hugely popular. Each plan will be tailored specifically to the needs and income of the individual and the employee will also have the option of topping up the contributions made by the employer.
The Benefits of the New Pension Scheme
Current UAE laws stipulate that foreign workers only receive an indemnity at the end of employment – awarded according to the employee’s length of service. The new scheme is expected to be a far more lucrative proposition than the current cash lump sum, paid at the end of employment. This is the first serious scheme in the country that seeks to distribute the burden of expats pension contributions between the employer and the employee, and local government officials are hoping it could persuade more skilled foreign workers to make their home in the fast-growing country. Expats will be further encouraged by the announcement that investments can be tracked on a daily basis through the use of secure web portals. Customers will have access to real-time data on their account as well as the plan’s overall performance. The flexibility of the new scheme will also allow expat investors to change their overall contributions in line with the performance of their plan, or a change in their own circumstances.
According to Trade Arabia, all investment funds will be managed by the trustee, the NABD Trust Company in Jersey. This means that a trust structure will be developed that is completely independent from employers. This groundbreaking announcement is all the more impressive because of Jersey’s involvement, and it will put people at ease with such a new pension product. The island has a world-renowned financial regulatory system that provides a safe haven for investments from all over the world. The UAE is a country where around 90 percent of the population is from overseas; this news will be almost universally welcomed – and it should result in increasing numbers of foreign workers arriving to do business.
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