British expatriates warned to make pension provision

More than 100,000 Brits live in the UAE, with around six million in total living as expats outside of the UK.

DUBAI // British expatriates are likely to return home with no savings and no pension provision despite earning tax-free salaries, according to financial advisors.

The warning follows advice from the UK’s Foreign and Commonwealth Office (FCO) to plan financially for the unexpected or risk becoming destitute.

About six million Britons live outside the UK – more than 100,000 of them in the UAE.

“A lot of people return home with less than what they came with. It is a frighteningly common problem,” said Jonathan Johnson, a senior wealth advisor at Prosperity in Dubai.

“People come here for tax-free salaries with their housing and kids’ education paid for. Usually what then happens is they find themselves with a bit of money in their pocket and they splash out on a Porsche or a nice big 4x4.

“They have brunches every week and buy expensive watches or handbags. All of a sudden they find out there’s a gaping hole in their savings.”

The FCO issued a 10-point checklist last month to expatriates highlighting the main financial pitfalls, such as not having money to pay for treatment in the case of sudden ill health.

“Our consular staff across the world have dealt with a high number of expats requiring assistance for financial issues – whether as a result of a house purchase gone wrong, having inadequate funds to pay for medical bills or experiencing some other misfortune that has resulted in financial hardship,” said Mark Simmonds, an FCO minister.

“It’s important to do your homework so that you are well informed about your new environment before you travel.”

A release accompanying the statement said that as well as financial ruin from property disputes or bankruptcy, one of the biggest issues faced was pension complications.

Chris Ferguson, the managing director at Guardian Life Management in Dubai, said there were tax incentives in the UK to save for a pension but in the UAE it was customer driven.

“It’s ultimately up to the customer to go and find financial advice in order to save,” he said. “That’s why they tend to put it off.

“They get wrapped up in a lifestyle, and they go home with nothing. They see Dubai as a holiday destination and they live like they are on holiday while they are here.”

James Thomas, a regional director at Acuma, said he had encountered Brits who had been in Dubai for more than 30 years and had not made any provision for pensions.

“It does get forgotten about and suddenly people have been here for years and they realise they need to start sorting out their financial situation,” he said. “By then it’s normally too late. It is sadly quite common that people will depart from the UAE with nothing but memories.”

A recent study by UK bank NatWest found that the UAE was the third most popular place to live for Britons, behind Australia and Canada.

Despite many moving here for career opportunities and tax-free salaries, 92 per cent said they planned to move back to the UK eventually.

But Steve Gregory, managing partner at Holborn Assets in Dubai, said the profile of expatriates had changed since the financial crisis in 2009, and more were now interested in saving money.

“People tend to be less frivolous with their spending than they were five or six years ago,” he said. “They are more interested in financial security than they once were.

“People are either by nature cautious and careful with their savings, or they blow the lot.

“We still see circumstances where people have blown the lot and got into debt. But they’re less prevalent than they used to be.”