Three ways retirement in UAE will change beyond recognition
By Will Grahame-Clarke, 10 Oct 17
Retirement in the sunny UAE looks set to change beyond recognition according to research by Old Mutual International and Quilter Cheviot.
The research also shows how the gratuity scheme in the UAE can contribute towards providing a fund for retirement.
77% of people in the UAE expect to receive an end of service gratuity. A small proportion, 13%, are not sure if they will receive a gratuity, perhaps due to some uncertainty around the terms of the scheme.
For many expats in the region, the decision over whether they receive a gratuity might depend on whether they leave their employer before they leave the country. If they leave their employer they should qualify for a gratuity, but if they transfer to another country with the same employer then they may not qualify.
The amount of money that people expect to get from their gratuity varies greatly. Whilst 24% expect their gratuity to be over US$20,000, 68% of people expect their gratuity to be below US$20,000 with an average payment of US$11,500.
There are mixed messages in the UAE regarding whether a gratuity is a replacement for a person’s individual pension savings. The research shows that only 12% of people are completely relying on the gratuity to fund their retirement, with 51% relying on the gratuity payment ‘a little’ and 34% are not relying on it at all.
The average amount of time people in the region expect retirement to last is 20 years. This is a long time for any gratuity to last, which is perhaps why so few people in the region are relying on the gratuity in isolation.
Evans adds: “A gratuity should be considered when looking at someone’s long-term savings plan, but as our research shows, it is not being relied on in isolation.”
