Retirement realities: Understanding perceptions on retirement saving for expats in the Gulf
Smart
Smart are experts in pensions technology globally.
We believe workplace saving should be simple and that everyone deserves to have a reliable income in retirement.
We understand the needs of savers, employers, financial institutions and governments when it comes to retirement saving.
Our technology already powers large retirement savings plans in Europe, Asia, the US and the Middle East.
Introduction
In recent years, government agendas have been increasingly focused on the importance of saving for retirement. It has become a priority for employees, too, as they consider how they will fund their lives once they’ve left the workforce.
Our research focuses on the Kingdom of Saudi Arabia (KSA), Qatar and the United Arab Emirates (UAE), three gulf countries in the midst of demographic, economic and societal transformation. Each is enacting their own structured reform programmes (like Vision 2030 in KSA), consisting of ambitious governmental plans for economic, social and environmental development and diversifying their economies from their traditional sources of growth.
The population structures and financial dynamics of the gulf countries vary quite drastically. However, one thing the KSA, Qatar and the UAE have in common is their proportionately large expat populations. This is primarily due to increased opportunities and benefits for foreigners to work and move their families out with them. In turn, though, these mean that adjustments to public provision are needed.
Retirement funding is one such provision. The current end-of-service gratuity system for expat workers in Qatar, the UAE and the KSA consists of a severance payment to employees at the end of their employment contract.
This model is intended to act as a substitute for the pension savings employees may miss out on while working outside their home country. However, the system has its challenges. It can place an uneven burden on employers’ balance sheets and can be challenging in terms of financial planning. Additionally, it means that many employees face uncertainty about their financial future in retirement. Employees may also want the ability to invest their gratuity allowance, particularly into a choice of funds that are meaningful to them, which isn’t possible within the current system.
The research
In April 2024, we surveyed over 1,500 expat employees across the KSA, Qatar and the UAE to garner their perceptions and understanding of retirement saving whilst living in the Middle East. Read on to find out what these savers want and need from a retirement saving system.
Survey respondents originated from 64 different countries, demonstrating the wide breadth of nationalities present in the region.
Key findings
People are engaged in saving for retirement
Our findings indicate that people are researching their options and actively thinking about how to ensure they have enough to live on in later life. Importantly, responses show that retirement options also play a part in making significant life decisions like choosing where to live and work.
of people said they had a good understanding of the retirement savings system before moving to the Middle East, showing that it is something they took an interest in.
Even more people said they understand their current options now that they’ve moved to the Middle East, with 83% saying they understand their retirement savings options well or fairly well.
of people said the benefits offered by their employer actually played a part in their decision to move to Qatar, the UAE or the KSA from their home country.
When moving to Saudi Arabia / Qatar / the UAE, how much, if at all, did the benefits offered by your employer play a part in your decision?
People are actively taking responsibility for saving for retirement
88% of people say they are somewhat prioritising or highly prioritising saving for retirement versus other expenses at the moment.
How much, if at all, do you prioritise saving for retirement versus other expenses at the moment?
However, 92% of people also think that either the government or their employer – or both – should play a role in implementing and regulating their retirement savings, indicating the need for systemic support.
Do you think the government or your employer should have a role in implementing and regulating your retirement savings plan?
People want choice in whether and how their money is invested
They want the option to contribute regularly to a savings fund as well as their employer, and with the option to release funds early in times of need.
of people would prefer to have savings in a lower risk fund but 40% would prefer a higher risk fund, neither or aren’t sure, highlighting the need for choice.
Which of the following, if either, would you prefer to have your savings in?
People think the system could be improved
Compared to their home countries, people acknowledge that there are benefits to the current systems, however there is room for improvement.
of people say the current end-of-service gratuity system only partly or doesn't at all meet their retirement savings needs.
To what extent, if at all, does the current end-of-service-gratuity system meet your retirement saving needs
of people had ideas for how the current system could be improved with some key themes emerging:
Hear from some of our survey respondents on improvements that could be made:
Create more awareness to end-beneficiaries about the rights and entitlement
Introduce an option for employees to access a portion of their end-of-service gratituity before leaving their job, especially in cases of financial hardship or for specific life events
I think it is crucial to have a transparent system that clearly explains how gratuity is calculated based on years of service and salary
Government should make it compulsory for both employer and employee to contribute toward retirement funds
Consider adjusting the end-of-service gratuity system in the UAE to be more in line with international standards and to provide greater flexibility for employees
Need to be adjusted against inflation, and should be sufficient enough for retirement life
I think governments should encourage the expats to invest their end-of-service inside KSA
Introduce options for employees to choose between receiving a lump sum gratuity or contributing to a retirement savings plan
Contact us
Our team works with governments and large financial institutions around the world, providing the technology to implement digital workplace savings plans at scale. If you'd like to discuss any aspect of this report, or would like further information about Smart's technology, we'd love to hear from you.
Email us: paas@smart.co
Methodology
The research was conducted by Censuswide, among a sample of 1,504 expats who are employed in Qatar, the United Arab Emirates and the Kingdom of Saudi Arabia. The data was collected between 18.04.2024 and 25.04.2024. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.
Please note: Percentages throughout may not total 100 due to rounding.
