Problems of Pension Systems in UAE (Part 4)

2.2. Problems of Pension Systems in UAE

There are currently many issues that are faced by people who are working in the United Arab Emirates. A survey done by the famous website Bayt.com carried out a survey in collaboration with YouGov to find out problems faced in UAE has revealed many discrepancies in the UAE job market. There are many people who have indicated that there has been no pay rise at their current jobs. Most people also work in companies with a fixed payment structure. Almost half of the people were found to be dissatisfied with their current salary which means that there is a serious mistrust issue among employees and their employers in the country. Only 4% people were happy and well satisfied with their salary structure. Employees in UAE are given some common job benefits which include medical insurance and air tickets on an annual basis (Bayt & YouGov, 2013). People though are not interested in keeping their jobs if they can find work in a flexible manner. People in general are not loyal on the basis of their salaries in UAE. Most employees believe that their loyalty is mostly affected by career growth opportunities at their workplaces. Most employees in UAE receive gratuity on retirement but the number of persons who receive pensions are very low. Many people are interested in contributing in a pension plan and say that they are will to contribute in a pension fund from their salaries. The cost of living is increasing in the country which has made the expatriates more serious about saving their earnings to secure their future especially in old age after retirement (Richardson & McKenna, 2002:67-68). It is becoming difficult to save while living in UAE and this means that UAE government must take steps to ensure that people are still attracted to especially work in the private sector organizations of UAE as the conditions in neighbouring countries around the world are improving continuously and important workforce is getting attracted to return to their countries after serving for 5 to 10 years in UAE.  The quality of life is certainly better in UAE but there are a lot of issues that make the decision of staying in UAE difficult for longer periods. Most people believe that there are better jobs available and they want to switch jobs for better ones. Some people also believe that salaries are currently stagnant because there is a lot of talent available for hire in UAE which decreases its monetary value. The general laws of UAE are also employer friendly and do not support employees more frequently. Most people with good jobs also spend money outside the country as they take international holidays and go to other places for leisure. Most people find themselves in middle level management which stagnates their careers because there are fewer opportunities available in the higher management of companies.

UAE is generally a great country to live due to its tax free economy and great quality of life. The only trouble is a lack of retirement plan options for expatriates. Pension is necessary because everyone gets old and gets past the working age. The saving for pension should start with the start of earning. There are very little employer based pension schemes available in the Middle East region. People however can opt for independent financial advice to make a retirement plan for themselves. The Emirate of Abu Dhabi has seriously considered the creation of a pension system for expats in the region. There are no state sponsored funds present currently but the trend is now on the path of change with serious consideration given to such system on higher administration levels of the UAE government. Such schemes though need to be made mandatory to create regular pensions for people and this will also mean that expats will look to invest their money in UAE because of a secure future due to the setting up of a pension fund for them. The Emirate of Dubai is now also seriously considering different pension schemes for expats as most people who live in Dubai send major portions of their salary back home and do not save in UAE as they are unsure of UAE financial rules and system in general (Bayt & YouGov, 2013).