Expats are relying on their tax-free end-of-service gratuities in the United Arab Emirates to bolster their pension savings.
Nine out of 10 expats are paid a bonus at the end of their contracts in Dubai and Abu Dhabi.
For 62%, the payment is at least £4,150, says research by financial firm Old Mutual International.
Expats are paid the gratuity when they have worked at an organisation for at least a year, although the bonus can be withheld under some circumstances, mainly breach of contract.
Many of the expats take the bonus and leave the UAE to retire elsewhere, although the government has recently introduced a five year visa for retirees to encourage them to stay on.
Working on into retirement
But the research showed a huge number of expats plan to continue working in the UAE after retirement age.
The reasons were for social (45%) or financial (35%), with all (81%) saying they expect to be self-employed.
In 2017, 43% of expats expected to retire between the ages of 50 and 55 years old, but this has fallen to 35% in 2018 as many expressed they want to work later in life.
Paul Evans, head of region, Middle East & Africa for Old Mutual International, said: “Gone are the days of someone receiving a gold watch on the day they retire and then solely relying on their pension for the rest of their life.
Cause for concern
“Instead, as our research shows, people may choose to work part-time or even in a self-employed capacity. These new practices mean that creating a financial plan, which takes into account someone’s unique circumstances, is more crucial than ever.
“The fact that 59% of respondents are either fully or partly relying on their end-of-service gratuity for retirement could be cause for concern, as the research shows that on average they are relatively small payments. A holistic financial plan which accounts for this gratuity but also looks at any other income streams will help someone prepare for their aspired wealth in retirement.”
The report warns that self-employment is a good option for many older workers, but reminds that other retirement funding needs to be in place should they become too ill to run a business.