Abu Dhabi-owned, Falcon Private Bank is developing pension schemes for expats to help companies manage retirement savings for workers in the UAE.
The bank is considering offering pension schemes in a similar structure to the pension schemes in the US, where both companies and employees invest in a pool of assets managed by independent investment funds.
The pension management scheme is expected to be ready within the next two to five years, as such structure is new to the UAE and it takes time to be developed with the regional business climat in consideration.
Falcon Private Bank’s asset management unit, based in Zurich, has started trials managing a pension fund for expatriate staff at Chevron, the US oil giant, and is seeking to target other corporate customers wanting to provide pensions to their expatriate employees.
The bank is fully owned by Abu Dhabi’s Aabar Investments and is still in a process of development of new strategies aiming at attracting larger numbers of investors.
Expatriates account for around 85 per cent of the UAE’s population of nearly 8 million, according to the National Bureau of Statistics.
So far, unlike many other countries, the Emirates does not provide a federal pension scheme. Instead, companies are required to provide staff with gratuities, also known as end-of-service-benefits, a lump sum that is determined by the length of an employee’s service.
In November, Dubai’s Department of Economic Development said it was in the initial stages of exploring a federal pension scheme for workers in the public and private sectors to replace gratuities.
Pensions providers and other lobby groups say such provisions represent unfunded liabilities and could be better managed externally by fund managers. Critics respond that such schemes shift the risk from the company to individual employees.
Aabar’s Falcon Private Bank is one of the first locally-owned companies to seek to manage the retirement wealth of the UAE’s expatriates. The bank reported assets under management in the region rose about 10 per cent to $1.1bn since the start of the year. The bank’s is expecting to add to its staff of 300 worldwide by about 10 per cent this year, with 10 or so people to be placed in the UAE.
