By Lubna Hamdan
The number of expat employees in the UAE who are not prepared financially for retirement is very concerning, according to Mercer
Nearly half (45%) of UAE expat employees in the UAE either have no plans for financial security post-retirement or plan to work beyond the retirement age to ensure continued income, according to a 2020 UAE Security and Savings survey by global consultancy Mercer.
As many as 61% 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.
But planning for retirement is becoming a pressing issue as more expats remain in the country for longer durations, according to Mercer UAE’s Retirement Business Leader Tarek Zouiten.
“The number of expat employees in the UAE who are not prepared financially for retirement is very concerning. Employees must understand that the current end of service benefits are far from enough to ensure an adequate standard of living post-retirement,” he said.
Currently expats working for a company for 25 years will only receive two years’ basic salary, Zouiten said, while an average person will need 12 times their total salary to maintain a decent standard of living post-retirement.
He added: “Ensuring UAE expats are better prepared for post-retirement challenges will require a fundamental mind shift among employees which can be achieved with financial education and progressive regulations like the DEWS recently employed in DIFC”.
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.
The UAE government also has a key role in educating the public on the importance of savings and encouraging employers to provide the right incentives, according to Zouiten.
Furthermore, the Mercer survey found that expats who have been in the UAE for seven or more years and plan to stay for another seven or more years may be more receptive to holding long-term savings and investments in the region due to the fact that they’re more likely to belong to the Gen X cohort and married with children, and therefore have greater reason to plan ahead.
The workers surveyed expected to retire at an average age of 57.2 with 54 percent expecting to retire between the ages of 55-64.
Mercer recently partnered with DIFC to help launch the DIFC Employees Workplace Savings Plan (DEWS) which introduces a progressive end-of-service benefits plan which offers a voluntary savings plan.