Whilst some companies in the Middle East employ a corporate benefits package, which may include a corporate pension scheme, most are still opting for the minimum gratuity entitlement - which it is expected will soon to be relinquished due to the numerous inherent complications.
 
Though gratuity schemes are undeniably great for the employer, they are not necessarily so for their employees - hence the more astute employers are making the move to gratuity replacement schemes (corporate pension schemes) to attract and retain key staff members.

As an example of the difference a corporate pension can make, if we took an imaginary employee who has worked for your company for 15 years, their first years Gratuity entitlement has made no growth (not even at deposit rate!) for the remaining 14 years that they have worked for you. Just think what that could have yielded over the same period in some managed pension fund

Even if you stay with the same employer for 20 years and earn AED 15,000 a month, your gratuity upon retirement is unlikely to exceed AED 250,000. That may sound a lot initially but if you live for a further 20 years it will provide you with AED 12,500 a year - just US$ 3,400 or £1,800 a year!

So what can you do?

Well, firstly you can start making additional contributions to your retirement yourself. Their are a wide range of tax-efficient international pension plans available that have the flexibility to make contributions regardless of where you reside in the world and allow you to increase, decrease and even suspend contributions as and when circumstances dictate.

Secondly, try and educate your employer. It is appreciated that improving employment packages can be hard in the region, but there are major benefits for the employer both in terms of staff acquisition and retention as well as the benefits to you. This is money that the employer is obliged to put aside anyway; it is not going to cost him anymore and the gratuity contributions will work smarter for both of you.

How can Candour Consultancy help?

Candour offers advice on a wide range of tax-efficient international person plans. We can help you find the most suitable policy for your personal circumstances, complete the application form and monitor the policies performance. We do not charge you a fee for either the advice or the establishment of the pension.

Additionally, we advise on several flexible gratuity replacement schemes to meet your employer’s needs with benefits that can include one or all of:

• The option to establish different contribution levels and benefits for each tier of staff

• The option for employer only, employee only or employer & employee contributions

• The option to hold back benefits until the employee has undertaken a specific length of service

• The option to hold the pension plan in trust to avoid fraud

• The option to attach life assurance or death in service

All the personal and corporate pension schemes we recommend are international policies with leading financial institutions. These policies have the flexibility to receive contributions and pay benefits anywhere in the world.

For further information on international personal pensions or Gratuity replacement plans, contact Candour Consultancy and provide us with your preferred contact details and an overview of your requirements.