Why Are Expats In The UAE Reluctant To Save For Retirement?

The majority of expat professionals living and working in the UAE are planning to retire at around the age of 55, but few are saving enough to ensure a comfortable future.

A new survey on behalf of a well-known offshore insurance company suggests less than half of expats in the UAE are saving enough to finance a long retirement either back in the home country or in another country of their choice. The survey itself was undertaken by the well-known YouGov poll, with its somewhat negative finding coming as no surprise to a good number of expat professionals in the region.

Taking into account that surveys of this type are normally undertaken to draw more business to so-called investment firms, the results of the YouGov poll would seem to indicate a majority of respondents are now reluctant to sign up via IFAs as they no longer trust the offshore industry or its freelancing and possibly unregistered representatives. Nevertheless, the results of the survey indicate a change in the savings habits of over half of those who took part, even although many were not entitled to a state pension in their home countries.

Another reason for the reluctance to commit to a fixed amount of savings every year might well be the present-day instability of jobs in the Middle East, besieged as they are by governmental programmes intended to restrict the numbers of expat professionals and replace them with locals. In addition, investment opportunities such as buy-to-let give better returns as well as capital returns on the sale of such properties. As 80 per cent of those surveyed said they would return to their home countries on retirement, buying a property ahead of time and letting it out saves the stress of finding another home if a contract ends early by government decree.

Around half of the expat professionals surveyed said they were not entitled to state retirement pensions at home, with just under a third believing their home state pensions will cover them. One third of respondents already had a retirement portfolio, of which half claimed a value of less than $50,000 and the majority claimed less than $100,000. For those with no wish to retire in their home countries, Canada, New Zealand, Australia and the UAE itself were cited as best options, but only a third of those surveyed are saving 10 per cent or more of their monthly salaries for that eventuality.

Apart from the possibility of suddenly being left without a job and unable to touch their savings without paying hefty early withdrawal penalties, other reasons for a lack of savings include inflation, the imposition of extra charges on expats by various UAE government and the sharp rise in international school fees in the region. Most expats surveyed said they would start to save for their retirement 10 years before the actual date, with personal circumstances and family responsibilities taking precedence whilst jobs are still secure.