Many surveys most notably one released in late 2009 have stated that many UAE residents have not thought about how they will manage when they retire. This is particularly true for many expatriates who according to the report seem to be just hoping that the money they save during their working years will be enough to see them through their retirement.
A HSBC Bank’s Future of Retirement survey last year expressed the view that it is very worrying that more than 85% of people living in the United Arab Emirates have no idea at this stage how much money they will actually have for their retirement. Only approximately 13% of those who completed the survey are confident that they have a well thought out plan in place for their golden years.
Another observation was that less than 20% of those surveyed felt they really understood their long term finances and what the implications would actually be for them in the future and this was as opposed to 27% of people living in other parts of the world.
A representative from a Dubai based financial and insurance advisory firm has also said that a lot of people living and working in the UAE had adequate state run pensions back in their own countries but since moving out here they have not set up anything to replace them. He went on to say that many here believe that the added benefits they have in the UAE that they did not have back home will allow them to save enough for their retirement.
Another benefit that UAE workers feel will compensate for the lack of a pension is the end-of-service gratuity which is a payment of 21 days pay for each year worked but insurance experts argue that this figure will fall well short of what will be required for them to make ends meet sufficiently during their retirement.
As working conditions are classed as being very good here and high salaries that require the payment of no income tax are wide spread many expatriates are hoping that this will inevitably allow them to save enough. However financial advisors disagree and fervently recommend setting up a specific savings plan that will offer a good fixed rate of return after an agreed term. This will yield a guaranteed figure as compared to a speculative one that many hope they will have at the end of their employment life. Financial advisors also argue that you can never be certain of achieving a certain level of savings yourself because nobody can ever adequately predict unforeseen life events
One retired business manager stated that if he now returned home to the UK to retire he would be obliged to pay 40% income tax on all his earnings so he says for those who have made a good living during their time in the UAE it is much more beneficial financially for them to retire here and this retiree now plans to have an active retirement for many years to come living in his Villa in Oman.Paul Holdsworth, Staff Writer, Gulf Jobs Market News