DIFC Employee Workplace Savings for Australian Expats in Dubai

If you’re an Australian working in Dubai or considering a move to the UAE, understanding the DIFC Employee Workplace Savings (DEWS) scheme is crucial for your financial planning. As financial advisers specialising in helping Australian expats navigate their international careers, we’re often asked about the DEWS scheme and how it fits into broader financial strategies.

Let’s break down what you need to know.

What is the DEWS Program and Why Should You Care?

Think of DEWS as Dubai’s version of superannuation, but with some key differences. Introduced in 2020, it replaced the traditional end-of-service gratuity system for employees in the Dubai International Financial Centre (DIFC). Instead of receiving a lump sum payment when you leave your job, your employer now contributes to a savings scheme throughout your employment.

For Australians used to our superannuation system, this might sound familiar. However, DEWS operates quite differently, and understanding these differences is crucial for your financial planning.

How DEWS Works for Australians

Your employer will contribute 5.83% of your basic salary to your DEWS account for your first five years of service, increasing to 8.33% thereafter. What makes this interesting for Australians is that unlike super, you can access these funds when you leave your employer, not just at retirement age.

One of the most common questions we get from our Australian clients is whether they should make voluntary contributions. While DEWS allows you to top up your savings through salary deductions, this decision needs careful consideration, especially given the Australian tax implications.

Investment Options

Unlike Australian super funds where you often have extensive investment choices, DEWS offers a more streamlined selection. Your contributions are automatically invested in the ‘Low/Moderate Growth’ Fund unless you choose otherwise. While this might seem limiting compared to what you’re used to back home, it’s designed to balance growth with risk in the Dubai market context.

This highlights the importance of ensuring that you review your investment options and make sure that they’re aligned with your risk profile. A 2 – 3% difference in annual returns over a 5 year period in Dubai, could make a substantial difference to your retirement lifestyle over time.

Tax Considerations: The Big One for Aussies

Here’s where things get particularly interesting for Australians. The ATO’s treatment of DEWS can significantly impact your tax position, both while working in Dubai and upon returning home. Unlike superannuation, DEWS isn’t automatically recognised as a retirement scheme by Australian tax authorities.

When you eventually return to Australia, the timing of your DEWS withdrawal can have significant tax implications. This is why we often work with our clients to develop a repatriation strategy well before they plan to return home.

Making DEWS Work Within Your Broader Financial Strategy

For most of our Australian clients in Dubai, DEWS is just one piece of their financial puzzle. Here’s how to think about it strategically:

Consider keeping your Australian super active while working in Dubai. DEWS shouldn’t be viewed as a replacement for super, but rather as an additional savings vehicle that offers different benefits and access conditions.

If you’re planning to stay in Dubai long-term, you might want to think about how DEWS fits with your other investments. The scheme’s USD denomination can provide useful currency diversification for Australians whose other assets are primarily in AUD.

Practical Considerations for Different Scenarios

If you’re moving between employers in Dubai, you’ll get a new DEWS account with your new employer. While you can’t combine accounts, you can keep your old account invested or withdraw the funds. This flexibility can be particularly useful for Australians planning their finances around eventual repatriation.

For those planning to leave Dubai altogether, you have options. You can either withdraw your DEWS balance or keep it invested. This decision should be made as part of your broader repatriation strategy, considering factors like exchange rates and your Australian tax position.

Looking Ahead: Making the Right Decisions

As Australian financial advisers specialising in expat wealth management, we recommend taking these key steps:

• First, understand your DEWS investment options and ensure they align with your risk tolerance and financial goals. While the default fund might be suitable for some, it’s worth reviewing whether a different option might better serve your needs.
• Second, develop a clear strategy for how DEWS fits into your broader financial planning. This includes considering how it works alongside your Australian super, other investments, and long-term financial goals.
• Finally, plan ahead for eventual repatriation. The decisions you make about your DEWS account can have significant implications for your Australian tax position.

Next Steps

Understanding DEWS is crucial for Australian expats in Dubai, but it’s just one part of your financial picture. Whether you’re just arriving in Dubai or you’ve been here for years, it’s worth reviewing how DEWS fits into your overall financial strategy.

At Ally Wealth Management, we specialise in helping Australian expats navigate these complex financial decisions. If you’d like to discuss how DEWS fits into your broader financial planning or have questions about managing your finances as an Australian in Dubai, we’re here to help.

Feel free to reach out to discuss your specific situation and how we can help you make the most of your time in Dubai while securing your financial future back in Australia.

Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.

Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.

Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.

General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.