Retirement readiness in UAE at par with global average of 13%

A combination of demographic, individual and financial elements is poised to derail people's retirement plans unless they start preparing for the same at the earliest, a global survey by HSBC Insurance has said. The fifth annual Future of Retirement study titled "It's Time to Prepare", puts South Korea as the least prepared country and India as the best. Even though the study has revealed that the preparedness gap in the UAE is at par with the global average in most areas, i.e. 87 per cent, the good news is that due to the UAE's youthful population profile – the average person is currently around 20 years old – it gives the UAE more time to plan, or what is often called a "demographic dividend". The study shows that people's short-term survival strategies in the midst of recession are creating a serious long-term pensions' downturn deficit and that there is a continuing lack of pensions planning, even though people are aware that they are likely to live longer. This is being exacerbated by poor levels of financial understanding, education and access to advice and people are more concerned with protecting their possessions in the short-term than ensuring they can look forward to a financially secure retirement According to the study, the consequence of these combined factors is that many people will struggle to make ends meet when they reach retirement, unless they urgently review their priorities and planning. Stephen Green, Group Chairman of HSBC, said: "A perfect storm is confronting pensions planning, created by an ageing population, falling pension funds values, a drop in state and employer contributions and an economic downturn which is forcing people to make tough financial choices." The study has identified a "preparedness gap" in people's pensions planning across the world with nearly nine out of 10 people not feeling fully prepared for their retirement. The Future of Retirement survey questioned 15,000 people in 15 countries, including the UAE, making it one of the largest studies of its kind in the world. Giving the break up on the preparedness levels of the people globally, Ishrat Kiyani, Regional Head of Wealth Management, HSBC Bank, Middle East, told Emirates Business : "South Koreans are the least prepared for retirement. The percentage of people who do not feel very well prepared for retirement is 58 per cent in India, 75 per cent in the United Kingdom, 83 per cent in Canada, 84 per cent in Saudi Arabia, 85 per cent in France, 86 per cent in the United States, 87 per cent from the UAE, 89 per cent in Turkey, 89 per cent in Hong Kong, 91 per cent in Singapore, 91 per cent in China, 92 per cent in Mexico, 94 per cent in Brazil, 97 per cent in Japan and 98 per cent in South Korea." About the UAE, the study said that 87 per cent of people do not have any idea about what their retirement income will look like (this is in line with the global average of 87 per cent). About 13 per cent of people feel well prepared for retirement (this in line with the global average of 13 per cent), only 38 per cent of people feel they understand their short-term finances very well, while 19 per cent of the people surveyed understand their long-term finances very well (lower than the global average of 27 per cent). Explaining why the UAE was lower than the rest of the world in its understanding of long-term finances, Kiyani said: "It is important to recognise that being prepared means very different things to different people across various regions. "We have identified a large number of individuals across the world and the UAE who do not feel prepared for later life. These people may face financial hardship in later life if their standard of living drops below levels of their acceptibility. "The report findings reveal the importance of the role of the individual and the need for personal responsibility in preparing for retirement. Yet the findings also show that families do not feel prepared and are only partially effective in taking charge of their retirement plans. This leaves a major preparedness gap, which is producing shortfalls in household provision. Often the most vulnerable groups are women and/or people in low income households who live in South America and Asia." In terms of preparing for retirement the UAE sample revealed that 29 per cent of the respondents are in favour of increasing the retirement age (higher than the global average of 23 per cent). Confirming the findings of the report, KV Shamsudheen, Director, Barjeel Geojit Securities, said: "I have been giving financial advise to people in the UAE for the past 39 years and despite the fact that people here are well-paid, they don't plan for the future. This is particularly true of the expatriates. Most of them spend all they earn here without any thought to their future and their old age. The result of this is that many of them go back to their home countries thinking that they will be able to lead a good life as they have worked in the Gulf for