End of Service Benefits in the Middle East has been saved
End of Service Benefits in the Middle East
Funded workplace savings in the DIFC – Are you change ready?
We are pleased to welcome you to Deloitte’s dedicated webpages on End of Service Benefits (“EOSB”). These dedicated webpages specifically consider the impact of recent changes to EOSB, in particular the introduction of a mandatory workplace savings regime, which was brought into law in the Dubai International Financial Centre ("DIFC") with effect from 1 February 2020. The expectation is that these changes will extend to other countries in the Middle East.
The objective of these pages is to support all our clients who are directly or indirectly impacted by the changes, providing a central repository for important documents such as relevant Regulations and Law, in addition to consultation papers published by the DIFC Authority or the DIFC’s Financial Services Regulator (the “DFSA”).
We will continually update these dedicated webpages with the latest information provided by the relevant regulatory authorities in the Middle East and our own insights on what these mean for employers in the region. To read our most recent updates, please click here. Alternatively please do speak with any of the specialist contacts listed here.
What has changed?
End of Service Benefits (“EOSB”) payments in the Dubai International Financial Centre (the “DIFC”) have been replaced with Funded Workplace Savings from 1 February 2020. These changes affect an individual’s future entitlement but do not impact the value or format of delivery of any EOSB accrued up to 31 January 2020.
This represents a significant shift in the approach given that historically EOSB payments have had no funding requirements, in most cases existing as unfunded ‘on-balance sheet’ defined benefit-style liabilities for employers.
All employers and employees operating in the DIFC are directly impacted by these rules, and employers have been required to participate in a ‘qualifying’ workplace savings plan from 1 February 2020 (although employers had until 30 April 2020 to make contributions into their chosen plan, backdated to 1 February 2020).
The changes also have broader implications in terms of setting a benchmark for reward best practice and talent attraction in the Middle East.
So what can you find on these pages?
For employers operating in the DIFC, where the impact and operational challenges of becoming compliant and maintaining compliance with the new rules is likely to be significant, we hope that you will find it helpful to keep updated with our latest news.
These pages also house key publications and recordings of webinars that we broadcast. We hope to provide you with a “one stop” source of knowledge, information and, importantly, insights on the transition from End of Service Benefits to Funded Workplace Savings.
We will also of course provide our perspective on any updates from the DIFC, and wider Middle East region, as they arise.
How can Deloitte help?
We can help you to develop, embed and evolve your approach to the introduction of Funded Workplace Savings in the DIFC. Deloitte has, for a long time, supported organisations to design, build and implement the most appropriate solution for employee savings and pension arrangements across the globe. Imparting our breadth of experience across tax, regulation, governance and market practice, we have assisted organisations of varying sizes across different sectors to deal with the challenges associated with employee reward plans.
Chris and his team at Deloitte assisted us with setting up an approved Qualifying Alternative Scheme (QAS) in the DIFC. Thanks to the team’s extensive knowledge of the market, timely insights and their review of all of our plan documentation plus the application submission, we were able to navigate the complexity and successfully obtain approval for our plan.
Combining the strength of our global network, with the insight and focus of our Middle East offices, Deloitte has built a reputation for bringing the right support to our clients in dealing with the challenges that the Funded Workplace Savings requirements present for employers, particularly in the context of their broader reward strategy and long term growth ambitions.
This support can be provided in different ways, including:
- Strategy – helping you evaluate your current approach to Funded Workplace Savings based on your employee demographic in both the DIFC and the wider Middle East region. Employers will have to decide whether to participate in the DIFC’s Employee Workplace Savings (“DEWS”) scheme or whether to establish their own, bespoke, Funded Workplace Savings scheme.
- Plan design – helping you to design, build and implement the right solution for your employees. This can involve helping you to structure your own plan or could be providing support with vendor selection to identify the right suppliers for your plan. This will be relevant where employers look to establish their own, bespoke, Funded Workplace Savings scheme.
- Communication – helping employees understand the Funded Workplace Savings requirements, how this differs from historical End of Service Benefits, how your plan will work and what employees need to do in moving into this “defined contribution” style long term savings environment.
- Shari’a compliant funds – Deloitte’s dedicated Middle East team can assist in the Shari’a compliant certification of fund options that need to be provided under a plan. This will be relevant where employers look to establish their own, bespoke, Funded Workplace Savings scheme.
- Plan certification – helping you submit and seek annual approval for any plan in accordance with the criteria prescribed by the DIFC. This will be relevant where employers look to establish their own, bespoke, Funded Workplace Savings scheme.
- Historical liabilities – what, if anything, will employers do to fund historical End of Service Benefits liabilities? How do you value the cost today vs tomorrow and what are the pros and cons of funding these liabilities?
- Governance – how will employers manage the ongoing operation of the plan? What framework is necessary to ensure the efficient operation of the plan whilst maintaining a focus on compliance and a positive employee experience? This will be relevant where employers look to establish their own, bespoke, Funded Workplace Savings scheme.
Above all, Deloitte are able to assist you with the various stages of responding to these changes – helping you manage projects in line with key deadlines and necessary approvals.