Emiratis tell officials they want to retire at 45 in the UAE

Take our poll: At a time when many countries are raising the retirement age above 65, most Emiratis in a new poll say full pensions should be available at 45.

Dr Hala Saleh Mohamed of the UAE's Department of Economic Development, says officials might consider lower retirement age to free up jobs for youngsters. Silvia Razgova / The National
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DUBAI // At a time when many countries are raising the retirement age above 65, most Emiratis in a new poll say full pensions should be available at 45.

Australia, Taiwan, France, Britain, Germany and Greece have all raised their retirement ages in response to the dual challenge of falling birth rates and increased life expectancy. Spain and Italy are expected to follow suit soon.

Emiratis are required to complete 20 years of employment to access their pensions, making it technically possible to retire at 38, but those who do would receive a reduced pension.

It increases by 2 per cent for every year worked past 20, and anyone retiring before 55 is subject to a penalty pension deduction.

The poll on the General Authority for Pensions and Social Security's website (gpssa.ae) asks at what age people should be able to access their pensions. Of the 3,177 respondents who had voted yesterday, 57 per cent selected the lowest option: 45.

Another 17 per cent chose 50, 8 per cent 55 and 16 per cent 60. The poll is still open and accepting votes.

An employee at the pension authority said they were "studying the possibility of lowering the age, and wanted to know people's opinions on the matter", but would not comment further.

Dr Hala Saleh Mohamed, an economic researcher who has worked for the Abu Dhabi Department of Economic Development, said the authority might consider lowering the retirement age if they wanted to create more positions for those just entering the job market.

"I don't think it would have as big an effect on the economy because the pension system here is based on years of employment and not just age," she said.

"But something like this must be looked at very carefully and studied very thoroughly before deciding to implement. You have to know just how many people fall into each category so you can calculate the cost this will have on the country's finances and see if it is feasible.

"You also have to look at this from all angles, and not just economical. For instance how will this affect 45-year-olds psychologically?"

For countries affected by the global economic crisis, keeping people at work for longer makes sense. It means keeping a bigger workforce productive for longer, paying out costly pensions for a shorter period and a general boost to the GDP.

In addition, because birth rates are falling in many countries, and life expectancy is increasing, a larger proportion of the population is elderly. This means there are relatively fewer people working to finance the pensions of those who are retired.

In some countries, the strain of financing state pensions could bring the economy to its knees - and one solution is to increase the retirement age.

There are exceptions. In Australia, one of the countries least affected by the crisis, the retirement age has been increased by two years.

Khalid Al Ali, a director in the financial services industry in Dubai, said he believed the authority should consider lowering the penalty age for women only.

"Women should be given an incentive to retire at 45 with access to, let's say, no less than 80 per cent of their pension. This will give them a chance to be with their children in their teen years and have a better influence on the child's upbringing, thus aiding the economy by ensuring lower delinquency rates."

A recent study by Booz & Co found that if female employment rates were to match male rates, the country's GDP could increase by 12 per cent.

The social structure of Emirati culture, Mr Al Ali argued, ensures women are always provided for. "Even if inflation takes its toll on her pension, the household would still have an income."

Given an option, Mr Al Ali said he would like to retire at 50. "I don't want to be too old to enjoy my retirement."

Mariam Al Madani, a retired schoolteacher, disagreed. The Emirati mother retired at the end of the 2005 school year with a full pension. "I don't think that lowering the pension age is a good idea," she said. "At 45 you can still be productive, you can still give back to society, its not right to be a burden on the country when you can still contribute."