UAE's retirement visa move an initiative to tap 'silver economy'
The retirement visa initiative by the UAE Government announced in 2018 is a great example that will benefit the UAE economy from the growing spending power of global wealthy retirees estimated to hit $15 trillion in 2020, experts said at the 4th Wealth Arabia Summit (WAS).
"The UAE's Retirement Visa is a key initiative that will attract lots of retirees to come and relocate to the UAE. This will help the local economy in many ways. This is a great example of how governments could tap the spending power of the ageing population," Christophe Lalandre, senior executive officer of Lombard Odier, told more than 250 delegates at the WAS held at Mina A'Salam Hotel.
"The UAE and the GCC region, which have a large young population, will not suffer due to the growing ageing population. But the region could benefit from the Silver Economy by attracting the wealthy retirees and have them spend part of their wealth in the leisure facilities," said Lalandre.
In September 2018, the UAE Cabinet approved a law to provide retired residents over the age of 55 a long-term visa for a period of 5 years, with the possibility of renewal, if eligibility criteria is met. The new law is effective from this year.
According experts, with the spending power of the growing ageing population expected to reach $15 trillion by 2020, global investors must use opportunity to tap the potential properly.
Every day, 10,000 baby-boomers of the 1950s are retiring in the USA alone, who have a higher spending power than the young men and women who enter the job market,"
Global population tripled in 70 years, from 2.5 billion in 1950 to 7.5 billion in 2019, not only because more babies are born, but also due to the longevity of people as they now live longer than before.
"We are in an era of low-growth economic environment, and this will continue for a longer period.
Although the global population is growing fast, the economy is not growing fast enough. Why? It's not because the number of babies are growing too fast, but because the life expectancy is growing as well. People are living longer than before," said Lalandre.
"The increasing life expectancy of people will see more elderly people in the world, than younger ones. The number of older people is growing at three times than the number of young people in the world."
By 2030, the number of people in the USA above the age of 60 will be equal to the number of people below 60. By 2050, the number of aged people will outnumber the younger ones by a large margin.
"Is this a challenge? Yes, it is. But it also provides a great opportunity for economies. Most of these retirees have more wealth than those replacing them in the job market. So, it is important to tap their wealth," Lalandre says.
He cited the example of Nestle's acquisition of Purina - the animal food producer - as an example of investment into the Silver Economy.
"When Nestle acquired Purina, most people were surprised at their decision. Now, it is a jewel in their crown and one of the fastest growing companies within the Nestle family. Most ageing people live with pets at home, when their children go out. Animal food sector is thriving and will continue to grow due to this factor, Lalandre said.
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