Expats in the United Arab Emirates face a retirement dilemma when they come to move their tax-free savings back home when they retire.
Although the UAE is a magnet for millions of expats looking for better pay and standard of living, new research shows that two out of every three wants to return home in retirement.
Only one in 10 plans to stay in Dubai or Abu Dhabi, while 16% will leave for somewhere other than their home nation. The rest – 11% – are undecided.
The figures come from a report by wealth managers Old Mutual International.
The company argues that expats in the UAE need to think about their financial futures by choosing savings and investments that are suitable and portable for moving back to their home nations.
Expats flee UAE in retirement
The problem is compounded by the multinational make-up of the UAE’s population.
Expats from 200 different countries are represented – from lowly blue-collar workers to high-flying executives and government workers.
From an estimated 9.2 million population, only 1.4 million are Emirati nationals.
Looking at expats from North America and Europe, three out of four Americans will retire to the USA, six out of 10 Europeans will retire to their country of origin, while only half of British expats intend to return to the UK.
Paul Evans, head of region, Middle East & Africa, Old Mutual International, said: “The research shows just how many expats plan to retire back to their home country.”
Tax and investments
“With so many UK expats stating their intention to return to the UK, there is a very clear need for a portable investment solution to enable them to take their savings home in a tax efficient way.
“There are many investment options open to UK expats to invest in whilst overseas, but for the products to be tax efficient and avoid a UK deemed gain tax charge when they return to the UK, they impose limitations on the assets which can be held.”
Research also accuses expats of frittering away the tax they save on earnings rather than putting the money aside for retirement.
The study looks at the cost of living in the UAE, which is significantly cheaper than in the UK, Europe, the US and Australia but still has some big costs, such as renting or buying a home, health care and education.