Retirement is becoming more and more of a pipe dream for many workers. A troubled global economy paired with longer life expectancies is forcing many to continue to work far past the age they imagined because of a lack of sufficient savings.
According to the 2021 UBS International Pension Gap Index, UAE is one of the top countries in the world where private savings are not required to supplement an individual’s pension after retirement.
Comparing to other countries UAE offers most nationals a pension income almost equivalent to working income, said the report that analysed pension systems in 24 countries worldwide.
In the UAE, Emiratis are eligible for pensions and other retirement benefits after reaching the retirement age of 49 or serving a minimum of 20 years in total. Expatriate employees have their end-of-service entitlement covered by the UAE’s gratuity scheme.
“The UAE boasts one of the best-positioned pension schemes globally. But even this system is not exempt from demographic shifts, putting pressure on it in the coming decades. While there’s time and opportunity for pension reform in the country, our role, as a trusted advisor to our clients, is to provide them with the insights and tools to take the necessary decisions throughout various life stages to meet their present and future financial needs.” Dr Niels Zilkens, managing director and head of wealth management for the Arabian Gulf and NRI at UBS, said.
“Basically, the UAE offers most nationals a pension income almost equivalent to working income, depending on contribution time.”
In addition, countries like Singapore, the Netherlands, Australia, Denmark, Sweden, Switzerland, and Saudi Arabia asked for low and manageable private savings rate, said the report.
“The UAE’s population is one of the youngest globally. While more than 30 people are in working age for every single person in retirement currently, over the next three decades, the ratio will fall to four workers per retiree,” said the report.
Taking Europe as an example, the UAE can follow suit and implement reforms and more compensation measures to incentivise its pension system to balance its ageing and retirement ratio, the UBS report said.