UAE pension scheme among best globally

The UAE is one of the top countries in the world where private savings are not required to supplement an individual’s pension after retirement, according to the 2021 UBS International Pension Gap Index.

The UAE offers most nationals a pension income almost equivalent to working income, said the report that analysed pension systems in 24 countries worldwide.

The index outlines to what extent an income solely from the mandatory part of each national pension system is sufficient to maintain an accustomed standard of living in retirement and secure a comfortable financial situation in old age.

In the UAE, Emiratis are eligible for pensions and other retirement benefits after reaching the retirement age of 49 or serving a minimum of 20 years in total. Expatriate employees have their end-of-service entitlement covered by the UAE’s gratuity scheme.

“The UAE boasts one of the best-positioned pension schemes globally. But even this system is not exempt from demographic shifts, putting pressure on it in the coming decades. While there’s time and opportunity for pension reform in the country, our role, as a trusted advisor to our clients, is to provide them with the insights and tools to take the necessary decisions throughout various life stages to meet their present and future financial needs.” Dr Niels Zilkens, managing director and head of wealth management for the Arabian Gulf and NRI at UBS, said.

“Basically, the UAE offers most nationals a pension income almost equivalent to working income, depending on contribution time.”

In addition, countries like Singapore, the Netherlands, Australia, Denmark, Sweden, Switzerland, and Saudi Arabia too ask for low and manageable private savings rate, said the report.

“The UAE’s population is one of the youngest globally. While more than 30 people are in working age for every single person in retirement currently, over the next three decades, the ratio will fall to four workers per retiree,” said the report.

Taking Europe as an example, the UAE can follow suit and implement reforms and more compensation measures to incentivise its pension system to balance its aging and retirement ratio, the UBS report said.

— issacjohn@khaleejtimes.com

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.