Most foreigners working in the UAE will only get a relatively small amount of gratuity payment when they retire and go back to their home countries, according to a survey.
Nearly 60% of UAE workers depend on gratuity payments to partly of fully fund their retirement, according to a study from Old Mutual International and Quilter Cheviot.
According to the research, 84% of survey respondents in the UAE said that they will receive end-of-service gratuity when they leave their company. For a majority (62%), the payments will not exceed AED 20,000 (£4200).
“Gone are the days of someone receiving a hold watch on the day they retire and then solely relying on their pension for the rest of their life”
Additionally, 62% of respondents said that they plan to retire in their home countries, although Old Mutual believes this number may decrease in the wake of the UAE's decision to introduce five-year visas for retirees above the age of 55.
About one per cent expect to receive just less than Dh5,000, while 3.7% are looking to get between Dh5,001 and Dh7,500 and a further 2.8% are eyeing a Dh7,501 to Dh10,000 end-of-service pay.
The study found that most people working in the country do not have any other source of funds to rely on when they retire, such as a pension or retirement investment scheme, with 59% of those polled admitting that they are "fully or partly" relying on their gratuity for retirement.
According to Old Mutual International and Quilter Cheviot, ammount of compensation benefits are relatively small and a cause for concern.
"Gone are the days of someone receiving a hold watch on the day they retire and then solely relying on their pension for the rest of their life," said Paul Evans, Old Mutual International's head for the Middle East and Africa. "Instead, our research shows people may choose to work part-time or even in a self-employed capacity."
Evans added that"these new practices mean that creating a financial plan, which takes into account someone's unique circumstances, is more crucial than ever."
A vast majority of people (8 out of 10), however, said that they plan to continue working after retirement, primarily for social (45%) or financial (35%) reasons. Of the total, 81% said they expect to be self-employed in retirement.