Al Hathboor rolls out staff pension plan

Al Hathboor Group, a UAE-based well-diversified conglomerate, has launched a pension scheme for the company's 600 managers.

The scheme, which augments the country's end-of-term gratuity system, means that qualifying Al Hathboor staff will receive a payment at the end of their service that has been properly funded and managed.

HSBC is acting as adviser, trustee, custodian, administrator, record keeper and fund manager of the scheme.

"Currently, employers are not funding their staff's end-of-service gratuities, and are instead paying their liabilities as they arise from working capital," said M Salahuddin, CEO of Al Hathboor Group. "By setting up a properly administered and managed fund, Al Hathboor is adopting world-class standards of corporate governance, and is accounting correctly for its staff pension liabilities," he added.

"This move reflects the transformation of Al Hathboor from a local business house to a modern conglomerate that implements global standards at all levels," said V Jaiganesh, group finance manager at Al Hathboor.

In addition to enhancing its governance standards, Al Hathboor also sees the move as a tool in attracting and retaining skilled employees.

"By offering a corporate pension scheme, we are making a statement to our people: they are highly valued and their welfare and contentment is a boardroom issue at Al Hathboor Group," said Jaiganesh.

"Employee pension schemes in the GCC are virtually non-existent," said Simon Stirzaker, manager employee benefits at HSBC. "Staff have to rely on the end-of-service gratuity for their pension, which usually is an unfunded liability for their employer. Al Hathboor's move is highly significant for the region, since it shows a prominent local player taking steps to adopt best practice. Our view is that the majority of employers in the GCC will have adopted similar pension schemes by 2012," he added.

HSBC likens the pension scheme market to the employee healthcare market: 10 years ago, it was highly unusual to find an employer providing healthcare benefits; today private medical insurance is the norm for most.

"HSBC's view is that employee pension schemes will take off across the Gulf in the next two to three years," says Stirzaker. "This will be a highly significant development and is another sign of the growing maturity of these markets."