The UAE is a land of great opportunity, offering Emiratis and expatriates alike the chance to earn tax-free salaries and to enjoy a high-quality lifestyle. But there are also endless opportunities to spend money, and many people fail to put aside enough for their retirement and future health care.
While retirement may be the last thing on the minds of young people, the fact is that the earlier you begin saving, the more comfortable you will be in later life. However, too many of us are tempted to live beyond our means. A survey conducted last year by insurer Zurich International Life showed that most people failed to save at all even though they knew that their end-of-service gratuity would be inadequate to meet their retirement needs. Moreover, almost 90 per cent of companies self-manage these funds, meaning employees are vulnerable if the company goes out of business.
And, as The National reported yesterday, many people – including more than 50 per cent of Emiratis – have monthly personal-loan or credit-card payments. Banks aggressively market these products, which often carry high interest rates and inflexible repayment terms, but do little to incentivise people to save, with few products that are tailored to local needs and offer adequate returns.
As we have argued before, the time is ripe to consider a national gratuity scheme, where monthly contributions are held and invested by a third party. Such a scheme could be underwritten by government and managed either under international norms or in compliance with Sharia finance rules. They could also allow employees to make top-up contributions to the fund.
Most important, however, is for individuals to be realistic about their personal financial planning. Putting aside a proportion of your wage each month is a sensible, and relatively painless, way of protecting your future. Nobody wants to think about it, but we are all at risk of unemployment and illness, and we will all need to retire one day. The decisions you make now will affect how well you will live in the future.
