Sav­ing for re­tire­ment trend grow­ing in UAE: Sur­vey

The Pak Banker - - COMPANIES/BOSS -

The trend among UAE res­i­dents to save for re­tire­ment is grow­ing, a sur­vey by Na­tional Bonds Cor­po­ra­tion shows. The fi­nan­cial health check sur­vey by the lead­ing Shariah-com­pli­ant sav­ings and in­vest­ments com­pany in the UAE shows that in the sec­ond quar­ter 42 per cent of the re­spon­dents saved for re­tire­ment, mark­ing a six per cent in­crease com­pared to quar­ter-one re­sults, while 31 per cent save regularly to buy a home, a three per cent in­crease over pre­vi­ous re­sults. Ac­cord­ing to the sur­vey, 14 per cent saved for their chil­dren's ed­u­ca­tion, 10 per cent lower than those in first quar­ter.

The sur­vey also in­di­cates that 13 per cent of the re­spon­dents save for ba­sic needs. De­signed by fi­nan­cial ad­vis­ers at Na­tional Bonds, the fi­nan­cial health check was launched in Fe­bru­ary 2015 to help cus­tomers as­sess their fi­nan­cial sta­tus and take cor­rec­tive ac­tion to­wards achiev­ing a more re­silient fi­nan­cial fu­ture. To date, the sur­vey has re­ceived re­sponses from more than 1,000 cus­tomers across cul­tures and na­tion­al­i­ties. The re­sults for the first quar­ter of this year had re­vealed pos­i­tive fi­nan­cial prac­tices for most re­spon­dents, es­pe­cially the youth.

The ma­jor­ity of the sur­vey re­spon­dents are mar­ried cou­ples (81 per cent), with bach­e­lors com­pris­ing 18 per cent and di­vorcees ac­count­ing for only one per cent. Most re­spon­dents (64 per cent) have chil­dren. While 72 per cent of them fall within the 26-40 year age group, 19 per cent are from the 41-55 year age cat­e­gory and only seven per cent fall within the 1825 year age group.

The sur­vey's re­sults di­vide the ma­jor­ity of re­spon­dents with chil­dren (64 per cent) into two cat­e­gories: 19 per cent say they save for their chil­dren's ed­u­ca­tion, while 48 per cent do not have an emer­gency fund. In ad­di­tional find­ings from the sur­vey, 47 per cent of the re­spon­dents said they make monthly pay­ments to­wards per­sonal loans, a three per cent in­crease com­pared to the pre­vi­ous quar­ter. Fur­ther­more, 38 per cent of re­spon­dents ad­mit­ted to pay­ing off debts to­wards credit cards, while 15 per cent pay out home mort­gages in com­par­i­son to 18 per cent in the prior sur­vey.

The sur­vey has also recorded a no­table de­cline in sav­ing among the 18-25 year age group, with 73 per cent of them sav­ing regularly - nine per cent lower than the last quar­ter's re­sults. Also, 27 per cent of the re­spon­dents from this seg­ment ad­mit to not hav­ing a spe­cific sav­ings plan, com­pared to 18 per cent in the first quar­ter of 2015.

In the 41-55 year age group, 49 per cent of the re­spon­dents said they make pay­ments to­wards per­sonal loans, a four per cent in­crease com­pared to pre­vi­ous re­sults. Savers for re­tire­ment in this group surged to 53 per cent, while 43 per cent make monthly pay­ments to­wards credit cards, an in­crease from 36 per cent in first quar­ter.

The fi­nan­cial health check re­sults also in­di­cate that 54 per cent of re­spon­dents in the 26-40 year age group keep a reg­u­lar record of their ex­penses, while 46 per cent do not. In the same age cat­e­gory, 71 per cent of re­spon­dents said they regularly pay for credit card ex­penses. The sur­vey also found that 28 per cent of re­spon­dents have a writ­ten will of in­her­i­tance.

In yet another in­ter­est­ing out­come, 86 per cent of re­spon­dents said they do not have a fi­nan­cial agent or plan­ner to help them man­age their fi­nance and money is­sues, which is a five per cent in­crease com­pared to first quar­ter re­sults. Ad­di­tion­ally, 78 per cent of re­spon­dents ad­mit­ted to not hav­ing taka­ful in­sur­ance.

Mo­hammed Qasim Al Ali, chief ex­ec­u­tive of­fi­cer of Na­tional Bonds, said the re­sults of the sur­vey are some­what dif­fer­ent from the pre­vi­ous one.

"This is log­i­cal and can be at­trib­uted to vary­ing so­cio-eco­nomic fac­tors that af­fect fi­nan­cial be­hav­iour pos­i­tively or neg­a­tively. For ex­am­ple, pri­or­ity is usu­ally given to ed­u­ca­tion or buy­ing a house at the be­gin­ning of the year, while be­hav­iours change in the sec­ond quar­ter with the on­set of the hol­i­day and sum­mer sea­sons," he said.

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