Pension for foreign

workers in Kuwait?


By Chidi Emmanuel

KUWAIT: Before leaving Kuwait finally, Charlie Dag was wondering what life is going to look like in his home country Ivory Coast - having spent most of his youthful and useful years in Kuwait. Without a permanent residence or any pension scheme, the future looked bleak as he navigated through the immigration counters at Kuwait airport on his way back home. “I am glad and sad at the same time. I am happy because I was able to train my two children up to university level - but sad because I spent all my youth years here only to go home almost empty handed – no Kuwait permanent residence, no passport and no pension. In my country, there is neither a social security nor pension scheme for me and I can’t start looking for a new job at this age (late fifties). Life is really going to be hard,” he said in dismay.

Most expatriates in the Gulf region share the same fate with Dag, but the UAE is now trying to reverse the trend with a landmark plan to create a pension scheme for foreign workers and to make the city a more attractive place to do business and live. The Gulf emirate is doing something to put a smile on the faces of the expatriates there. According to a recent report, the Department of Economic Development in Dubai (DED) has announced plans to launch a pension scheme for foreign workers by the end of this year. Sources close to DED said the pension fund will cover foreign workers in both public and private sectors.

The move is aimed at encouraging more expatriates to come to UAE for work as well as ensuring that those that are already present are willing to stay for a longer period of time. Another proposal under consideration is that of converting the end-of-service gratuity system into a pension system. The scheme will make the emirate the first in the region to offer a pension fund to expatriates who don’t pay income tax. “Once we complete negotiations with other departments, we will seek government approval so the project can be launched by the end of the year, the deputy director general for planning and development at DED, Ali Ibrahim was quoted as saying in a recent report.


For foreign workers in Kuwait, this is a welcome development. “UAE has always been the pacesetter in the region. When it changed the weekend holidays from Thursday-Friday to Friday-Saturday, Kuwait and other GCC countries followed. I hope they will follow UAE’s style this time around,” Layal Fahad, a Lebanese expat said. “Pension scheme in Kuwait? I think that it will be possible if the government wants to do it. Although there may be some hitches, Kuwait is equal to the task. If Dubai can do it why can’t we? The workers in Kuwait deserve a better system,” Jamel Haqi, a Kuwait businessman said in optimism. “This is a welcome development. I wish Kuwait can assist the foreign workers here who are working tirelessly to build this country,” Thomas Ferdinand, an Indian civil engineer said.  


“It is possible to have a pension scheme in Kuwait even though expats don’t pay income taxes. All they need to do is to create a ‘pension fund’ whereby a small fraction of the expat’s income will be deposited for a number of years. This fund will be invested and the profits accrued will be saved and paid as pension after your years of service,” Lilit Sargsyan, an Armenian economist explained.

According to a senior banker in one of the investment banks in Kuwait who preferred to remain anonymous, the pension scheme is workable even without governmental financial contributions. “A portion of the employee’s monthly salary (about 10 percent) and may be another 10-15 percent from the employer could be deposited in form of a yielding fund and put in a safe investment like government securities, bonds, treasury bills etc. At the end of your service, the employee’s contribution, the employer’s contribution and the accrued interests will sum up to be the employee’s pension,” he explained. “In this case the government can only serve as a regulatory body without making any contribution. Also, the government can assist the companies by reducing their corporate taxes,” he added.


Views: 133


You need to be a member of Africa Sustainable Energy & Environment Platform to add comments!

Join Africa Sustainable Energy & Environment Platform

Africa Business Panel | B2B Market Research

As a valued LinkedIn group member, we invite you to join a prestigious online community.

The Africa Business Panel is open exclusively to business men and women engaged in business on the African continent.


As a participant in the African Business Panel, you will benefit in several ways and at the same time, you will have no obligations whatsoever. You will decide if and when you want to participate. However, the more you participate in surveys, the better your chances of benefiting from your membership.

Click here to join now



© 2021   Created by Bas Vlugt.   Powered by

Badges  |  Report an Issue  |  Terms of Service