School Fees Put Before Retirement Plans - Report

Nine out of ten people in the UAE believe saving for retirement is not their priority, but school fees are.

The recent HSBC The Future of Retirement 2015 report which surveyed over 16,000 people across 15 markets noted that UAE residents are the least prepared of all nations questioned for retirement.

According to the report, the results of which were published in Arabian Business, UAE residents cite paying off debts (34 percent) and saving for children's education (29 percent) are more urgent financial commitments than retirement. In fact, only 13 percent of working age people think saving for their retirement is their main priority.

Gifford Nakajima, head of wealth development, UAE and MENA, HSBC Bank Middle East Limited, said: "While certain events cannot be anticipated, others that are in fact cited more often by working age people as having an impact on their ability to save for retirement, such as buying a home/paying a mortgage (37 percent), paying for children's education (29 percent), or starting a family (18 percent), can be planned for more proactively. For instance, our research shows us that only 1 percent of parents fund their children's education through specific education plans."

The survey showed that while the UAE may have moved beyond the financial crisis, many here are still dealing its lingering effects. Twenty three percent of pre-retirees in the UAE said they were still affected by the global economic downturn, either by unemployment (23 percent) or a drop in earnings (18 percent) and this was significantly affecting their ability to prepare for retirement.

Gifford Nakajima said, "if people start saving early enough and develop a sustainable financial plan that they can commit to, they will be able to cope with most of the major life events while preparing for retirement, but our research shows that planning for this stage of life is increasingly being postponed."