The Significance of Workplace Savings Plans in the GCC

The Significance of Workplace Savings Plans in the GCC

In today’s competitive business landscape, companies in the GCC region are realizing the importance of offering workplace savings plans to attract and retain top talent. These plans not only benefit employees but also influence company culture and long-term profitability.

As the CEO of Equevu, a pioneering Emirati-developed workplace savings technology, I have witnessed firsthand the transformative impact of these plans on both employers and employees. In this article, we will explore the compelling reasons for companies to adopt workplace savings plans, how employees can maximize their benefits, and how these plans align with the GCC’s labour laws and cultural aspirations. I will also provide insights from industry experts, including Sandrine Bardot, an independent consultant specialized in Total Rewards and former Global Compensation & Benefits Head at Mubadala and Majid Al Futtaim, as well as Ann-Marie Cambell, Chief People Officer and former head of HR for Dubai Airports, Qatar Airways, and Al Shaya Group.

Why Companies Should Offer Workplace Savings Plans:

Workplace savings plans serve as a powerful tool for companies to attract and retain the best employees. In a competitive global market, top talents are always seeking opportunities that provide financial security and a promising future. By offering savings plans, companies send a strong message that they prioritize the financial wellbeing of their workforce. Moreover, with the introduction of corporate tax and the potential benefits associated with contributing to these plans, companies may expect tangible rewards. Through my consulting experience, I have witnessed the thriving success of companies that embrace these plans, understanding that it is a mutually beneficial arrangement where employees’ financial security directly impacts the company’s overall success.

To underline this point, in a recent conversation I had with Ann-Marie Campbell, she shared her experience during a restructuring process. She recalled, “On the day of the announcement, my office was flooded with employees requesting that their End of Service Benefits (EoSB) not be transferred to the bank where their regular salaries were deposited. The distress expressed by employees at the prospect of their ESOB being deposited into their banks was genuine. They had no other means of accessing cash for their day-to-day needs.” This particular scenario underscores the need for businesses to take a more proactive role in supporting employees’ long-term financial well-being.

The Benefits for Employees:

Savings plans offer a multitude of advantages for employees. They act as a silent partner, steadily contributing to employees’ savings without them even noticing. Over time, these consistent contributions accumulate into a significant sum, providing a safety net for life’s major milestones, such as buying a home. Numerous studies support the notion that disciplined, consistent contributions yield better long-term results than trying to predict market movements. In fact, research from S&P Dow Jones Indices revealed that no mutual fund consistently outperformed the market benchmark over the past five years. This highlights the effectiveness of steady, disciplined investment over attempting to “beat the market.”

In my conversation with Ann-Marie Campbell, she made a significant observation, stating, “While savings plans offer benefits to employees, their effectiveness is compromised if employees lack basic financial planning knowledge.” She emphasized the pivotal role of these plans in fostering long-term financial thinking and stability among employees. Additionally, she pointed out that, despite many employees staying with companies due to the perceived growth of their End of Service (EoSB) benefits, “not all EoS benefits are secure,” as was evident during the Covid-19 pandemic. Therefore, workplace savings plans act as an invaluable layer of financial security for employees, supplementing the EoSB and promoting greater financial resilience.

Influence on Company Culture and Profitability:

Offering a robust savings plan has a profound impact on company culture. It signals that employers genuinely care about their employees’ present and future financial wellbeing. As Richard Branson wisely said, “Employees come first. If you take care of your employees, they will take care of the clients.” This prioritization of employee welfare fosters higher engagement, resulting in improved performance and profitability. According to a Gallup report, companies with high employee engagement outperform those with low engagement by an astounding 202%. Therefore, a workplace savings plan not only benefits employees but also contributes to a positive and thriving company culture.

Sandrine Bardot, wholeheartedly concurs with the significance of savings plans. According to her, these plans create an environment of trust, security, and long-term thinking among employees, ultimately leading to enhanced productivity. Sandrine also emphasizes that despite the initial costs involved in implementing savings plans, the long-term benefits, such as reduced turnover and the attraction of top talent, can significantly boost a company’s profitability over time.

Maximizing the Benefits:

To make the most of workplace savings plans, employees should focus on consistent contributions, starting early, and making informed investment choices. However, one crucial aspect that many overlook is the impact of fees. Even seemingly small fees can have a substantial long-term effect on savings. For instance, a 1% fee versus a 2% fee can result in a difference of $135,000 over 30 years for an employee contributing $10,000 annually. Therefore, employees must be diligent in selecting plans with low fees to optimize their savings growth.

Drawing from Sandrine Bardot’s valuable insights, it becomes evident that employees’ involvement in workplace savings plans goes beyond mere contributions. She suggests, “Depending on the specifics of the plan, employees may have choices regarding how their money is saved or invested.” This highlights the importance of tailoring these decisions to individual financial goals and risk tolerance. In doing so, employees take on an active role in managing their savings, ultimately maximizing the benefits and potential growth of their workplace savings plans. By empowering employees to make informed choices, companies can foster a sense of financial ownership and responsibility among their workforce, leading to a more engaged and financially secure workforce in the long run.

Aligning with GCC Labor Laws and Culture:

The UAE and KSA have set ambitious goals to attract global talent and increase household savings, respectively. These aspirations are in line with the importance of workplace savings plans. In my experience consulting with government and pension funds across the region, it is evident that supplementary savings plans through the workplace are essential for building a sustainable retirement ecosystem. This aligns with the recommendations of the World Bank, emphasizing the significance of these plans for employees and the broader economy. By adopting workplace savings plans, the GCC region takes a significant step towards achieving its long-term economic and social objectives.

To conclude, Workplace savings plans have emerged as a powerful tool for companies in the GCC region to attract and retain top talent while fostering a culture of financial wellbeing. By prioritizing employees’ financial security and providing opportunities for long-term savings, companies send a clear message of support and care. Employees, in turn, benefit from consistent contributions, increased engagement, and the potential for substantial financial growth. As the region’s ambitions continue to evolve, workplace savings plans align with labour laws and cultural aspirations, playing a pivotal role in building a sustainable retirement ecosystem. Equevu is proud to lead the way in providing a cutting-edge platform that empowers employees and drives financial independence in the Middle East.

About Equevu:

Equevu represents two synergistic entities: Equevu Ltd, a technology company in Abu Dhabi Global Market, and Equevu Consulting Services FZC in Sharjah Publishing City. The brand delivers a comprehensive suite of services that include technology-driven workplace and personal savings systems, corporate financial literacy programs, as well as specialized actuarial consulting services focusing on end of service benefits. Adhering to international best practices and supported by reputable regional investors, Equevu strives to promote access to financial prosperity. Please note that Equevu does not engage in any financially regulated activities.

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