Close to 85 per cent of of workers in the UAE will receive an end-of-service gratuity when leaving their company, according to new research from Old Mutual International and Quilter Cheviot.
The survey also found that 62 per cent of those respondents expect to receive over Dhs20,000.
Most expats in the region will get a gratuity payment when leaving a company they have worked at for more than a year. However, there are some instances when the gratuity could be withheld, with the most common reason being some form of breach of contract, the report said.
Up to 59 per cent of the respondents said they are either fully or partly relying on their gratuity for retirement. The amount will mainly be invested in a business or the stock market, the research found.
Paul Evans, head of Middle East and Africa, Old Mutual International, said: “Gone are the days of someone receiving a gold watch on the day they retire and then solely relying on their pension for the rest of their life. Instead, as our research shows people may choose to work part-time or even in a self-employed capacity.
“The fact that 59 per cent of respondents are either fully or partly relying on their end-of-service gratuity for retirement could be a cause for concern, as the research shows that on average they are relatively small payments. A holistic financial plan which accounts for this gratuity but also looks at any other income streams will help someone prepare for their aspired wealth in retirement.”
The majority (62 percent) of respondents also stated that they wanted to retire in their home country.
However, since the survey was conducted soon after the UAE took the decision to introduce a new five-year visa for expat retirees older than 55, 18 per cent of the respondents said that they would retire in the country, up from 15 per cent in 2017.
The survey also found that 81 per cent of those living in the UAE plan to continue working in retirement, either for social (45 per cent) or financial (35 per cent) reasons, with all expecting to be self-employed.
While 43 per cent of the respondents in 2017 survey expected to retire between the ages of 50-55, that number dropped to 35 per cent in the recent survey, with many more people believing they were likely to have to retire later in their life.
Nearly half (47 per cent) of respondents are expecting retirement to last between 11 and 20 years.
Mark Leale, head of Quilter Cheviot’s Dubai representative office, stated: “It’s fascinating that 81 per cent of people living in the UAE plan to be self-employed in retirement. Working in retirement, particularly on a self-employed basis, can be a positive experience, as it keeps people social and active. However, being self-employed also presents some challenges and anyone interested in taking on self-employed work to fund their retirement must have a financial plan in place, which takes into account the possibility that they physically could no longer be able to earn as they get older.
“The UAE has a dynamic and ever-changing retirement landscape especially considering its recent decision to introduce a new five-year visa for expat retirees older than 55 which may make it a more popular retirement destination than ever.
“With this in mind, anyone who is looking to retire in the region must understand how their end-of-service gratuity will add to their overall retirement plan and invest and save accordingly.”