The UAE has ranked globally, due to the nation’s efforts to improve the retirement system, according to Mercer CFA Institute Global Pension Index.
The index focuses on pension systems worldwide, which accounts for 65 percent of the global population.
The UAE has performed well in areas of adequacy, sustainability and integrity, the report showed. The UAE’s ranking accounts for the progress being made for Emiratis in the public and private sectors.
In addition, the rank also accounts for the progress being made to place a new retirement savings programme to support private sector employers and foreign employees as they plan for their financial future.
On a global scale, Iceland ranked number one on the index, followed by the Netherlands and Denmark, while Thailand was ranked last.
“The UAE’s index score improved this year,” Mercer’s Head of Investment and Retirement for IMETA Robert Ansari said.
“Included in the index for the second year, the UAE has fared better than a number of more established global peers. Like many of its peers, the UAE is preparing for an increased population size entering retirement, necessitating a well-run and adequately provisioned pension scheme.”
Ansari added: “A number of local and international firms with UAE operations recognise the benefits of private pensions and employee workplace saving schemes as a means to attract and retain talent, with the recent launch of the unemployment pension scheme — the so-called Golden pension scheme — aimed at enabling locals and expats to invest in their future while supporting the private sector with employee retention, ultimately furthering the government’s ambition to be a magnet for top talent.”
The UAE’s retirement income system comprises a minimum state pension and a national employment-based scheme administered by the Abu Dhabi Pension fund for the emirate of Abu Dhabi, the Sharjah Social Security Fund for the emirate of Sharjah, and the General Pensions and Social Security Authority for the rest of the emirates.
Employees contribute 5 percent of their salary, whereas employers contribute 12.5 percent to 15 percent of an employee’s salary, with benefits guaranteed by the government, the report said.
The report also added that the overall index value for the Emirati system could be increased by:
- Introducing a minimum access age so that the benefits from pension plans are preserved for retirement purposes
- Increasing the level of assets held in private pension arrangements to reduce the reliance on state pensions in the future
- Improving the required level of communication to members from pension arrangements
- Increasing the state pension age as life expectancies rise The Emirati index value increased from 59.6 in 2021 to 61.8 in 2022, primarily due to revised scoring.
“The Emirati index value increased from 59.6 in 2021 to 61.8 in 2022,” the report said.
Follow us on
