A rising cost of living that is outstripping salaries is blamed on a lack of retirement savings by expats in the United Arab Emirates.
Expats in the Emirates are forsaking long-term savings for day-to-day spending on a luxury lifestyle, according to new research.
The study found one in four expats try to make regular savings, while 61% admitted other calls on their cash were stopping them from making pension savings.
The results were published by the UAE’s Ministry of Interior’s English-speaking 999 magazine.
Around 15% of UAE expats admitted they save nothing for their retirement.
Expat pensions
When asked about their saving habits, most expats (66%) felt retirement was too far off for them to worry about how to finance their lifestyle when they give up work.
Inflation was cited as the next main factor distracting them from pension saving (60%), while earning too little (22%), paying off debts (9%) and other financial commitments (9%) were given as other excuses.
Employment laws in the UAE guarantee expats an end-of-service lump-sum payment calculated against how long they have held their post.
No pension schemes run in the UAE for expats – although the Dubai government has announced setting up a scheme is under review.
For British expats, Qualifying Recognised Overseas Pension Schemes (QROPS) or self-invested pension plans (SiPPs) are pension options, depending on tax residence.
QROPS are for permanent expats, while SiPPS can be used by expats on temporary postings who retain their UK tax residence.
Financial problems
Expats with UK residence qualify for pension contribution relief on a SiPP, and can also consider other tax breaks, like ISAs and investing thorough the Seed Enterprise Investment Scheme (SEIS).
The magazine editor-in-chief Lt Colonel Awadh Saleh Al Kindi, said: “Everyone should save some of their income towards funding their retirement. The research highlights a concern for expats in their old age.
“Retirement may be a long way off for many, but saving a little from a young age makes building a reasonable pension fund easier.”
The UAE government is concerned that many expats will face financial problems in their retirement if they live too much for today and do not make any provision for when they give up work.
