UAE among the best in the world by supporting the pension of individuals

The Global Retirement Gap Index issued by the Swiss bank group UBS revealed that the UAE is one of the best countries that does not require personal savings to support and supplement individuals pensions.

The UBS World Wealth Index on Monday ranked the UAE among the first countries whose net income is sufficient for citizens over 50 years to live a comfortable life after retirement, even without savings.

He said that the pension is 60% of the average salary of the last five years, with an additional 2% of the average wage added for each year after the first 15 years, Emirati citizens will have met the 15-year work requirement if they begin working at the age of 20.

That would enable them to continue to finance a good lifestyle in retirement years. “The UAE provides most of its citizens with a pension roughly equivalent to their income from work, depending on the duration of the contribution.”

Dr. Nils Zilkins, Chief Executive Officer, Wealth Management in the Persian Gulf and Indian Expatriates at UBS Group, said: The UAE has one of the best pension schemes in the world.

The UAE has one of the highest youth ratios in the world, with 30 working-age individuals per retirement age, but this number will drop to four against one in the next three decades, the report said.

The report continued: “Taking Europe for example, the UAE could follow suit and introduce more compensatory reforms and measures to stimulate its pension system to balance the rate of aging and retirement.”

The Global Retirement Gap Index pointed out that the extent to which income from the mandatory pension provided by the national pension systems of these countries would suffice to maintain an acceptable standard of living after retirement and to secure a comfortable financial position for individuals in retirement years.

The report analyzed retirement systems in 24 countries around the world, including the UAE, and focused on 3 basic pillars, at least one of which must be available to form a pension system:

1- Government pension: It is a redistribution system of income, financed by taxes or contributions of employees or employers.

2- Professional pension: Allocations are determined by the amount of contributions, and pensions are paid annually or at one time.

3- Special pension: A scheme, optional and often personal, run in particular. They may be regulated by different products, such as restricted savings accounts, insurance, or private investments.

The report classified the results of the analysis into 3 groups, the first of which consisted of States where it was likely that starting the retirement planning process at age 50 would be sufficient to maintain an acceptable lifestyle.

In the second group, it was stated that it was possible to maintain the standard of living if retirement savings were initiated at an earlier stage. In the third group, retirement will require additional ongoing external support to maintain an acceptable standard of living.