Retiring early remains out of reach for many in the UAE, with 45 per cent of residents saying they have not yet started saving for their golden years, a survey by insurance company Friends Provident International found.
About 44 per cent of people in the Emirates expect to retire by 55, while 63 per cent hope to do so before they turn 60, according to the FPI survey, which polled 1,000 people.
“There appears to be a strong disconnect between the aspirations of many individuals in this survey in the UAE to retire early and the reality of how much they will need to save for retirement,” David Kneeshaw, group chief executive at FPI, said.
The Covid-19 pandemic has put employee financial issues in the spotlight and many companies are now trying to formulate plans to help workers bridge their savings gap.
A 2020 survey by Mercer found that 45 per cent of foreign employees in the UAE either had no means of maintaining a decent standard of living in their retirement, or plan to work beyond retirement age to derive enough income for their later years.
In March, the Dubai government unveiled a new savings retirement scheme for foreign employees working in the emirate's public sector.
The foreign employees will be enrolled in the savings scheme by default and the employer will contribute the total end-of-service gratuity to the plan from the date of joining, without including the financial dues for previous years of service.
The Dubai retirement fund scheme will be supervised by a board of trustees with assistance from Dubai International Finance Centre. The scheme will offer foreign employees a choice of capital protection investment plans, including Sharia-compliant options.
The DIFC was the first entity in the UAE to set up a new gratuity system when it introduced the DIFC Employee Workplace Savings plan, or Dews, in February 2020.
The free zone’s employers are required to make monthly contributions of 5.83 per cent or 8.33 per cent of an employee’s wage, depending on their length of service, to a fund administered by a trust. Employees can also choose to make voluntary contributions to the Dews plan.
Meanwhile, 40 per cent of UAE residents will start saving for their twilight years only 10 years or less before they reach retirement, the FPI survey found.
Younger people in the UAE have a more realistic expectation about retirement, according to the FPI survey.
More respondents in the 18 to 24-year-old age group than any other said they will start saving between 15 and 20 years before they reach retirement, or between 20 and 25 years, it added.
About 27 per cent of those surveyed think they can retire on less than $2,500 (Dh9,181) a month, while a similar percentage of people believe $5,000 will be enough.
Another 15 per cent said they don’t know or are unsure of the amount required to retire.
Among people in the UAE who have some savings, 53 per cent said it is in the form of general bank deposits, FPI found.
“It is essential for everyone to prepare early when thinking about retirement,” Mr Kneeshaw said.