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Dubai to consider pensions for expat workers
| Published: | 18 Oct at 6 PM |
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Dubai may bring in pensions for its foreign workers in order to dissuade them from sending money home or to financial centres outside the emirate.
Estimates suggest that the majority of Dubai’s two million expat workers send at least 40 per cent of their earnings to trusted financial centers in their home countries or offshore. The introduction of expat pension schemes is aimed at keeping the money in the country.
Dubai’s Department of Economic Development considers the practice is depriving local government of funds which would devolve to the domestic economy. Consequently, the government is reviewing the World Bank’s recommendation that expat pensions should be introduced.
Briton Mike Savage, employed in Dubai’s media sector, said that he and a number of colleagues regularly transfer money to pay mortgages on their UK homes and also top up savings accounts in trusted UK banks. However, he added, if a reliable pension scheme including employer contributions was set up, he’d keep more of his disposable income in the country.
The World Bank has suggested three options; a retirement savings account, an update of the lump sum on leaving already in place, and a mobility savings plan with the option of withdrawal and a visa extension on unemployment until a new job is found. Expats, however, are questioning the intentions of the Dubai authorities, known to reverse former decisions when expats are involved.
Dubai is keen to access more of foreigners’ salaries to aid its recovery from the global financial crisis, which prompted a bail-out of the emirate by Abu Dhabi. Many popular expat destinations including Singapore allow expats to access national pension schemes, with one Singapore expat remarking that the Gulf was about working, making money and sending it home, adding that any pension plan would have to be more than generous to be taken seriously.
Estimates suggest that the majority of Dubai’s two million expat workers send at least 40 per cent of their earnings to trusted financial centers in their home countries or offshore. The introduction of expat pension schemes is aimed at keeping the money in the country.
Dubai’s Department of Economic Development considers the practice is depriving local government of funds which would devolve to the domestic economy. Consequently, the government is reviewing the World Bank’s recommendation that expat pensions should be introduced.
Briton Mike Savage, employed in Dubai’s media sector, said that he and a number of colleagues regularly transfer money to pay mortgages on their UK homes and also top up savings accounts in trusted UK banks. However, he added, if a reliable pension scheme including employer contributions was set up, he’d keep more of his disposable income in the country.
The World Bank has suggested three options; a retirement savings account, an update of the lump sum on leaving already in place, and a mobility savings plan with the option of withdrawal and a visa extension on unemployment until a new job is found. Expats, however, are questioning the intentions of the Dubai authorities, known to reverse former decisions when expats are involved.
Dubai is keen to access more of foreigners’ salaries to aid its recovery from the global financial crisis, which prompted a bail-out of the emirate by Abu Dhabi. Many popular expat destinations including Singapore allow expats to access national pension schemes, with one Singapore expat remarking that the Gulf was about working, making money and sending it home, adding that any pension plan would have to be more than generous to be taken seriously.
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