How corporate pensions can support retirement planning in the UAE

A strong benefits package with pension is a key differentiator for companies to attract and retain the best talent

The UAE’s push for comprehensive gratuity reforms encourages the adoption of corporate pension schemes. Pawan Singh / The National

As the UAE continues to solidify its position as a global business centre, ensuring the financial security of its workforce has become increasingly crucial.

Corporate pensions play a vital role in this landscape, offering a structured pathway to financial stability and retirement planning.

In the competitive global job market, a strong benefits package is a key differentiator for companies looking to attract and retain the best talent.

Corporate pensions, as part of these packages, provide employees with the assurance of financial security in their later years, fostering loyalty and long-term commitment.

This is especially relevant in the UAE, where the workforce comprises a significant number of residents who increasingly view the Emirates as their long-term home rather than a transient stopover.

For instance, a comprehensive corporate pension plan results in a notable decrease in employee turnover. Employees feel more secure about their future and are more committed to their long-term careers, knowing that their financial needs in retirement are being addressed.

This stability translates into higher productivity and a stronger, more cohesive organisational culture.

According to a PwC survey of 3,638 US adults last year, 60 per cent of full-time employees are stressed about their finances. This is slightly higher than the number who were stressed about finances during the height of the pandemic.

The UAE's population is becoming more aware of the importance of insurance, leading to increased demand for insurance products and services.

However, despite this growing interest, many people and companies remain underinsured or are not saving enough to meet future liabilities. This can lead to significant financial distress in times of need, such as economic downturns or health emergencies.

This gap can be attributed to a variety of factors, including a lack of financial literacy, the complexity of insurance products, and insufficient financial planning.

Corporate pensions offer a structured solution to this problem by providing a reliable means for employees to save for their future.

In the UAE, there is remarkable collaboration between the private sector, government and regulatory bodies, showcasing a unified effort to drive progress and innovation.

Initiatives such as the UAE government’s push for comprehensive end-of-service benefit reforms are steps in the right direction. These reforms encourage the adoption of corporate pension schemes and provide a framework for sustainable retirement planning.

The UAE government’s introduction of various long-term visa initiatives reflects its commitment to making the country a permanent home for residents.

This shift necessitates a focus on long-term financial security and retirement planning.

Employees are no longer saving solely for their return to their home countries; they are planning to continue their lives in the UAE, making comprehensive retirement planning non-negotiable.

It is also important that we, as industry leaders, work towards simplifying these processes and providing clear and accessible information to all stakeholders.

Leveraging technology can significantly enhance financial education and inclusion. Digital platforms and AI-driven tools can offer personalised financial advice and real-time insights into savings and investment performance.

This empowers employees to make informed decisions about their retirement planning, thereby increasing their financial security.

Corporate pensions are a vital component of retirement planning in the UAE, offering a reliable means for employees to save for the future while enhancing a company’s ability to attract and retain top talent.

As awareness and demand for insurance products continue to grow, addressing the existing gaps in cover and savings is essential.

Mohamed Seghir is chief executive of Hayah Insurance