• Of 1,504 expat workers surveyed, 60% said the current End of Service Gratuity (EoSG) system fails to fully meet their needs
  • EoSGs are traditional in the Gulf region and are retirement lump-sums awarded by organisations to departing employees, rather than contributory long-term savings or pension schemes
  • Clear appetite for reform and for greater workplace saving options, according to poll commissioned by global retirement platform Smart
  • Limited transparency and choice around current retirement arrangements cited as major problem with current system, holding back migration of skilled workers to region

Dubai: A survey of 1,504 expatriate workers in Qatar, Saudi Arabia and the United Arab Emirates has highlighted contrasting views on workplace benefits.

While 84% of those surveyed cited the benefits offered by their employer as playing a role in their decision to move to the Gulf, there is widespread dissatisfaction with the region’s End of Service Gratuity (EoSG) system. These one-off severance payments, a common practice in the Gulf Cooperation Council (GCC) region, are deemed insufficient for meeting retirement needs by 60% of respondents.

Reforms to increase satisfaction with the EoSG system are vital to maintaining the region's competitiveness as a work destination, according to the survey, commissioned by global pensions technology platform Smart. Of the expats polled, 88% said they are actively prioritising retirement savings over other expenses, and 82% said having enough money for retirement is "very important" to them.

A recurring gripe concerned the current system’s perceived lack of transparency. Only one respondent in four felt they understood the gratuity system well before moving to the region. Many expressed frustration at not having information about "exactly how it works and what percentage of my salary goes to retirement", in the words of one UAE-based respondent. Another, from Qatar, added that "it is crucial to have a transparent system that clearly explains how gratuity is calculated."

The absence of employee contribution options is widely regarded as a significant flaw in the current system. In Qatar, several respondents called on the government to "make it compulsory for both employer and employee to contribute towards retirement funds." The lack of an employee contribution option was also felt in Saudi Arabia, with one expat saying it would be "very helpful" if employees could deduct a small amount from their monthly salary to be added to their end of service gratuities.

Elsewhere, there was evidence that respondents wanted to see a more professionalised and regulated workplace savings and pensions culture in the GCC countries. More than nine out of ten of the expats polled think governments, employers or both should play a role in implementing and regulating their pensions. Some 60% wanted to see their retirement savings managed in lower-risk funds, with some age variation in preferences, emphasising the need for choice when it comes to how savings are invested.

Tim Phillips, Managing Director of Smart Middle East & Asia said:

"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. Reform is needed to improve transparency and introduce employee investment options across the region to help workers better plan for retirement. Implementing these 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."

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Media Contact: Smart Pension – Cathy Malden, Global Marketing Manager cathy.malden@smartpension.co.uk / pressoffice@smartpension.co.uk

About Smart

Smart is a global savings and investments technology platform provider. Its mission is to transform retirement, savings and financial wellbeing, across all generations, around the world.

Smart launched in 2015, its technology platform – Keystone – serves the needs of retirement savers globally. Keystone is specifically designed to help governments and financial institutions (including insurers, asset managers, banks and financial advisers) deliver retirement savings and income solutions that are digital, bespoke and cost-efficient. In addition to the UK, Smart is operating in the US, Europe, Middle East and Asia, with more than a million savers entrusting over £10 billion in assets on its Keystone platform. 

Aquiline Capital Partners, Barclays, Chrysalis Investments, DWS Group, Fidelity International Strategic Ventures, J.P. Morgan, Legal & General, the Link Group and Natixis Investment Managers are all investors in Smart.

For more information, please visit Smart.co.
We tweet as @SmartPensionUK