HSBC rolls out innovative employee benefits plan

Many UAE based companies, both local and multinational, have felt for sometime that they needed to do more to help their staff save for their retirement. This kind of benefit also helps to motivate and retain staff in an increasingly competitive labour market.

Under UAE Labour Law an expatriate completing 35 years of service gets two years of final salary which is simply not enough for anyone to retire on. However, until now the necessary additional employee benefit schemes have been thin on the ground; and many corporates have been reluctant to trust smaller operators whose custodianship might be passed to another party in the future.

After a full year in development, HSBC's new Employee Benefits Plan was launched this week with a major presentation to UAE corporates who met representatives from all over the world involved in handing this particular offering.

The investment expertise of HSBC is truly awesome. Each month HSBC tracks the progress of more than 15,000 funds for investors; so coming up with a suitable savings vehicle for individuals is the bank's bread-and-butter. HSBC has a scheme that locks away profits on equities in good years turning this into guaranteed capital, and can offer fully Islamic savings products.

By establishing a corporate scheme HSBC is able to pass on the benefits of wholesale rates to the individuals in the scheme. This makes the plan less expensive to operate than most tailor-made alternatives, so you save on charges and as much money as possible is put into the savings scheme.

HSBC is able to offer this service by levering the enormous administrative cost savings of the Internet and its global investment network. Meanwhile, the individuals in the scheme gain online access to their accounts from anywhere in the world at anytime.

You can see the amount saved for retirement - which is updated daily - and calculate your likely pension. This is also a 'portable' plan so if you move to another employer so does the plan.

After all the pensions' scandals of recent years it is bound to be a source of comfort to know that your global custodian is HSBC. This triple A-rated super-bank is not about to go away unless a comet collides with the earth, and there will be no unexpected 'variations in its mandate' to worry about.

So are there any downsides to this scheme? One investment consideration is that while HSBC is certainly rock-solid and employs brilliant staff, the best investments are always those made against the crowd.

But often this involves a higher level of risk than most people are comfortable with and there is a good argument that what you want from a pension fund is complete reliability and a guarantee of reasonably average returns. You also want low administration charges which come from a group plan. This is critical to getting the best compound returns from long-term savings.

On the whole, it is impossible not to be impressed by what HSBC has put together for its UAE corporate customers. You really struggle to find a reason why anyone would use any other scheme. The bank plans to roll this product out around the region, and it is sure to be widely taken up.