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Nearly half of companies in the Middle East provide enhanced end of service benefits (ESBs) for their employees, mainly to retain their key talent, according to a report by Towers Watson, a global professional services company.
The Middle East End of Service Benefits Survey Report suggested that 45 per cent of companies surveyed provided enhanced ESBs. In the UAE, an end of service gratuity is entitled to employees that complete one year or more in continuous service and is calculated on an annual basis.
Out of these companies, 59 per cent indicated that they offer a supplemental defined contribution plan — a retirement plan in which a certain amount of money is set aside for the employee every year. A defined contribution pension or savings plan is the most popular way of enhancing ESBs, followed by the application of continuous service and enhancing the accrual rate, according to the report.
''The number of companies providing an enhanced benefit has remained stable and the reasons for offering an enhanced ESB are broadly unchanged from the 2014 survey, with organisations offering enhanced ESBs in order to comply with local or industry best practice or perhaps more importantly to retain key talent within the organisation,'' Michael Brough, Director and International Benefits Specialist at Towers Watson in the Middle East, said in a statement.
The survey includes responses from almost 200 companies across the Middle East region operating in over 25 industries, including banking, finance and oil and gas. The majority of the respondents are multinationals.
The majority of companies surveyed, at 60 per cent, said they offer enhanced ESBs to all employees. Over 70 per cent of respondents indicated that the length of service is the most important factor to consider when providing an enhanced ESB, followed by grade, key talent and intra-company transfers.
Employers suggested in the report that their employees intended on staying in their organisations for five to 10 years, indicating that people are spending longer periods in the Middle East.
Long term savings or retirement plans are common in countries like the UAE, Egypt, Saudi Arabia and Turkey.
The report also showed that most companies currently have relatively small ESB liabilities, with the majority, at 39 per cent, indicating that their ESB liability is between $1 million and $5 million, followed by 23 per cent, with liabilities below $1 million.
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Source: Staff Report, gulfnews.com