Besides the fact that it is THE luxury event of the yearMay 27, 2015 9:48
Saving for retirement – or not
While 28% of Kipp readers believe they will be financially secure in later life, more than a third say they have not made any pension provisions.
April 26, 2010 4:00 by Katherine Azmeh
While retirement planning does not make for the most sparkling dinner party conversation, it is increasingly in the public awareness – and increasingly worth of discussion.
Given the devastating fallout from the financial downturn, investors who were banking on the stock markets for their retirement have had to do some rethinking, as retirement plans tied to equity markets went up in smoke during the recession.
In the UAE, there is no formalized system of state pensions. Many Emirati nationals take part in government schemes that require employers to contribute a percentage of their salaries to pension plans. But expats – particularly those who have been away for many years and have not paid tax in their home countries – are often disqualified or penalized over state pensions back home.
Things look even worse for UAE residents wishing to boost their retirement funds beyond the (often very low) state pensions.
Last year’s annual HSBC report concerning the “Future of Retirement” examined global and regional trends and attitudes to pensions. The findings revealed a general lack of preparedness and financial understanding among the UAE’s population.
Participants in the survey expressed a lack of certainty about both short-term and long-term financial planning. Most had never sought professional financial advice, nor pursued any financial education.
A “perfect storm” is brewing, according to HSBC’s report – referring to the financial and demographic factors that threaten to jeopardize an individual’s retirement plans if not dealt with properly.
There is a “lack of understanding people have around their long-term retirement needs. They are less well educated or aware when trying to understand these needs and to act on them, than with their short-term requirements,” noted Mark Twigg, of Cicero Consulting, which undertook the survey for HSBC Insurance.
Last week, we asked Kipp readers whether they expect to have enough money for a comfortable retirement. And the results showed that readers are slightly more confident about their pension provisions as compared with the findings of the HSBC survey.
While HSBC estimated 87 percent of UAE respondents “do not have any idea about what their retirement income will look like”, 28 percent of Kipp readers (the majority of who reside in the UAE) expressed confidence that they would have enough for retirement, with savings contributions being made regularly.
Only 15 percent said that they do not expect to have enough money at retirement, given that the financial crisis had taken a toll on their pension plan. Twenty-two percent of our poll respondents said that their retirement would depend on future economic recovery.
But, worryingly, more than a third of respondents – 35 percent – admitted they haven’t yet planned for retirement. For that group, dinner parties are probably more fun – but their retirement may not be.