2 out of 3 UAE expats financially ill-prepared for retirement: Survey

Two out of every three expats in the UAE admit that they are not saving enough for their retirement, according to 999 Magazine’s survey of the financial habits of UAE expats.

The survey, featured in the October issue of the Ministry of Interior’s official English monthly, reveals that a large majority of UAE expats are putting off their long-term retirement goals in view of their day-to-day financial responsibilities.

Findings of the retirement savings poll, undertaken in mid-September, show that 65 per cent of respondents maintain that they are unable to put aside enough in order to reach their monthly retirement savings goal because of other financial responsibilities.

About a quarter of respondents (24 per cent) said they try to stick to a plan and put some money away at regular intervals while 61 per cent of respondents said they stock up on their retirement savings whenever they can, but not regularly enough and not as much they’d like to.

Surprisingly, 15 per cent of respondents said they aren’t saving at all for their retirement, which experts maintain is a worrying sign.

“Inadequate savings today would make it harder for people to support and sustain themselves in the future. It will also be difficult for them to maintain during retirement the same standard of living enjoyed in the present,” noted Samira Zakour, Chief Marketing Officer of NBAD Trust Services, a wholly owned subsidiary of the National Bank of Abu Dhabi.

The 999 survey was handed out to a sample of 450 UAE expatriates of different nationalities and asked if they were saving enough money for their retirement.

Two-thirds of the participants said they were not saving enough because of a number of factors, with the top reason being that they do not see the need to save for retirement since it’s too far away to prepare for.

The reasons why residents are not saving enough are the rising cost of living (60 per cent), not earning enough (22 per cent), servicing of loans (9 per cent) and other expenditures (9 per cent).

Wealth managers and financial consultants that 999 Magazine spoke with for the report had a common thread of advice for UAE expats: Those who save as early as their first job have higher chances of having enough pension in their later years and have lesser risks with long-term investments.

Lt Colonel Awadh Saleh Al Kindi, Editor-in-Chief of 999, said: “There’s no way around the issue of retirement savings: everyone must make it a priority to set aside part of their income toward that goal. Our survey reveals a worrying trend and indicates that there is a lot of room for improvement. It is never too early to start investing in a retirement pot – once that is taken care of, people will find it more pleasurable to enjoy their life, which the higher leadership strives to protect, secure and make it better for everyone.”

While the UAE Labour Law requires employers to provide their expatriate staff with an end-of-service gratuity payment (a lump sum based on an employee’s length of service), there is no pension scheme for expats. Dubai is reviewing a pension scheme, seeking to become the first city in the region to create a pension fund for expatriates.

Experts insist that setting financial goals, charting a roadmap and then sticking to it is the only way to go about retirement planning. “An ideal way to save is to be disciplined enough and put some funds aside regularly. For example, to make a habit of apportioning a certain percentage of one’s earnings / monthly salary for safekeeping. That way, one is budgeting for expenses for the longer term and unexpected outgoings as one grows older and also saving for the future,” said NBAD Trust Services’ Zakour.

The special report is published in the October edition of English 999 magazine, a part of the Strategic Plan of the Ministry of the Interior to provide media coverage for the activities and efforts of the Ministry and Abu Dhabi Police. It also aims to encourage the public to contribute to the reduction of crime and enhancement of safety in the UAE.

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