60% of Middle East expats unhappy with EoSGs, Seek employer support

A remarkable 84 per cent of the 1,504 expatriate workers surveyed across the UAE, Qatar, and Saudi Arabia say that the benefits offered by their employer significantly influence their decision to relocate to the region, according to a recent study by Smart Pension.

The report, titled ‘Retirement Realities: Understanding Perceptions on Retirement Saving for Expats in the Gulf’, also highlights a key concern: over 60 per cent expats are dissatisfied with the current End of Service Gratuity (EoSG) system. They believe that these one-time severance payments, a long-standing practice in the Gulf Cooperation Council (GCC) region, fall short in meeting their retirement needs.

The additional key findings from the report revealed:

1. Retirement savings is a priority: The report reveals that expatriates are actively planning for retirement, factoring it into major life decisions such as where to live and work. Notably, 63 per cent of expats said they had a clear understanding of the retirement savings system before relocating to the Middle East, demonstrating their keen interest in the topic. Furthermore, awareness continues to grow, with 83 per cent of them now reporting a 'good and fair' understanding of their retirement options after settling in the region. 

2. Retirement savings taking priority over living costs: An impressive 88 per cent of expats say they are either somewhat or highly prioritising saving for retirement over other expenses at the moment.‍ 

3. Retirement support needed from employers and government: About  92 per cent of expats believe that the government, their employer, or both should play a role in implementing and regulating their retirement savings, underscoring the need for greater systemic support.

4. Seeking better options for investments and savings: Middle East expats also express a desire for the flexibility to contribute regularly to a savings fund alongside their employer, with the added option of accessing funds early in times of need. Interestingly, 60 per cent of them would prefer to invest in a lower-risk fund, while 40 per cent lean towards a higher-risk option, are undecided, or prefer neither, highlighting the importance of providing choice in retirement planning.

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5. System needs improvement: While the respondent expats recognise certain advantages in the current systems compared to those in their home countries, many feel there is still room for improvement. In fact, 60 per cent of expats say the existing EOS gratuity system only partially meets, or fails to meet, their retirement savings needs.

About 66 per cent of them offered suggestions for improving the current system, including periodic reviews of the system, employee contributions, greater transparency, employee training, inclusivity, early-access options, diversified investment choices, enhanced calculation methods, job portability, regional portability, and easier access to information.

Tim Phillips, Managing Director, Smart Middle East & Asia added, "The findings clearly show that the current workplace savings system has significant opportunities for change in order to fully meet the needs of today’s expatriate workforce in the GCC... improve transparency and introduce employee investment options across the region to help workers better plan for retirement.... reforms will not only secure the financial futures of our workforce but also bolster the GCC’s reputation as one of the world’s leading destinations for global workers and savers."