10 ways your UAE gratuity can now grow like an investment

NEW SCHEME SHIFTS GRATUITY FROM STATIC BENEFIT TO SOMETHING THAT BUILDS OVER TIME

- BY JUSTIN VARGHESE Your Money Editor

The UAE’s Ministry of Human Resources and Emiratisation (MoHRE) recently launched a new way for private-sector employees to make their end-of-service benefits work harder.

The new Savings Scheme turns traditional gratuity into an investment-based system that grows over time. Instead of a onetime payout at the end of employment, monthly contributions go into professionally managed funds that generate returns. Here are 10 key ways your gratuity can now grow like an investment — and what every UAE resident should know:

Gratuity turns active investment: The Savings Scheme replaces the traditional end-of-service gratuity with an investment model. Employers contribute monthly to approved funds on behalf of employees, and those amounts are invested. When employment ends, employees receive both the principal and any returns earned during the investment period.

Monthly payments grow in time: Instead of saving up a lump-sum payout, employers make regular monthly payments into the fund. The contribution rate is set by law:

■ 5.83 per cent of the basic monthly salary if the employee has worked less than five years.

■ 8.33 per cent if the employee has worked more than five years.

■ Payments must reach the investment fund within 15 days of the start of each month.