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Thu 3 Sep 2020 03:49 PM

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After launching retirement visa, Dubai urged to look at expat savings

Analysts say the launch of a renewable visa for foreigners aged over 55 will help Dubai to become a more long-term option

After launching retirement visa, Dubai urged to look at expat savings

Foreigners over the age of 55 will be eligible for a five-year renewable visa if they meet certain criteria. In its initial phase.

Dubai must follow up its retirement visa program with initiatives to build savings among the expat population, according to a leading analyst.

Foreigners over the age of 55 will be eligible for a five-year renewable visa if they meet certain criteria. In its initial phase, the program will focus on UAE residents working in Dubai.

Andreea Zugravu, principal at government and economic development at Kearney Middle East, told Arabian Business: “To further encourage applicants for the retirement visa, the emirate will also need to work out options for sustainable savings.”

Her comments follow a survey earlier this year which showed that nearly half (45 percent) of UAE expat employees either have no plans for financial security post-retirement or plan to work beyond the retirement age to ensure continued income while as many as 61 percent of respondents reported having no long-term savings.

Eligible candidates should meet one of the following requirements: a monthly income of AED20,000 ($5,445); savings of AED1 million; own property in Dubai worth AED2m.

The UAE government has been very proactive in recent times and has already taken several steps at the federal and local level to reform the labour and pension system, including changes to the mandatory end of service benefits.

The program “will contribute toward our tourism economy by facilitating frequent visits from families and friends of the retirees and increasing visitation from markets with a high retiree population,” said Mohammed Ahmed Al Marri, director-general of the General Directorate of Residency and Foreigners Affairs in Dubai.

Zugravu said that, with the majority of the expatriate population in Dubai aged between 25 and 39, the move would have long-term demographic implications.

“The older more experienced professionals look for more permanent residency formats and robust retirement support,” she said. “With the prospect of retiring in Dubai now, the emirate can attract and keep more experienced talent and build a more sustainable, invested, long-term-focused social fabric in the country.”

Rico Cachucho, partner, Hoxton Capital Management, agreed that the new plan will help bring stability to the emirate and also investment from companies.

He told Arabian Business: “This is a positive move, as it increases the view of expats considering Dubai as a more permanent residence, and to keep their wealth within the country as opposed to remitting it to other countries. Businesses, commerce, and investments will be attracted to the UAE as it continuously shows that it is maturing as a stable market.

"Commonly known as a transient place, Dubai is slowly becoming a more long-term option for its residents. Expats who typically lived here 2-3 years are now staying for longer and look for more long-term options. Its safety, lifestyle, culture is attractive to young, working people who are now aiming to reside in places where they can create strong foundations."

He added: "With the launch of a retirement visa, it creates certainty, loyalty, and stability for both young and older expatriates. It shows to other major, mature markets that have retirement systems in place that Dubai is increasingly becoming a competitive and major market."

According to a 2020 UAE Security and Savings survey by global consultancy Mercer, as many as 61 percent of respondents reported having no long-term savings, while 43 percent said they expect their end of service benefits to meet their long-term financial needs.

The study, which surveyed 50 senior decision makers and 500 workers based in the UAE, also found that only 24 percent have access to pension or saving schemes with their current employers, with four out of five employees perceiving a lack of concern from their employers about their financial wellbeing, resulting in lower satisfaction and loyalty levels.

In addition, 99 percent of UAE employees expressed the need for improved savings and investment benefits, while 81 percent claimed they would be less likely to leave their current employer if they were offered such benefits.

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