UAE Pension Scheme for Expats: How to Plan for Retirement

In 2024, the UAE is home to more than 11 million expatriates, making it one of the top destinations for professionals seeking career growth and a higher standard of living.  However, as expats build their careers, many are left uncertain about their long-term financial security, especially when it comes to retirement. Unlike their home countries, the UAE doesn’t have a mandatory pension scheme for expats. But with recent initiatives like the Golden Pension Scheme, expats now have new opportunities to save for retirement. 

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In this article, we explore retirement options for expats in the UAE, including key insights on the Golden Pension Scheme and additional strategies to help expats plan for their golden years.

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Can expats retire in the UAE?

Expats in the UAE can retire and stay long-term, thanks to the introduction of the Retirement Visa program. This visa, valid for five years and renewable upon meeting the criteria, allows expatriates to enjoy their retirement in the UAE’s vibrant environment. But to qualify for this visa, retirees must meet certain financial requirements:

• Be at least 55 years old and have worked for 15 years either in the UAE or abroad.
• Own property in the UAE worth at least AED 1 million.
• Have financial savings of AED 1 million or more.
• Alternatively, demonstrate a monthly income of AED 20,000 (or AED 15,000 for those in Dubai).

For expats who meet these qualifications, the UAE provides an appealing destination to enjoy retirement with world-class amenities and a high standard of living. The option to renew the retirement visa after five years offers stability and peace of mind for long-term expat retirees.

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Learn about the retirement programme in Dubai.

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Pension schemes for expats in the UAE 

Expats working in the UAE are not enrolled in a national pension scheme like their Emirati counterparts. However, that doesn’t mean retirement planning is off the table. Instead of pensions, expatriates are entitled to end-of-service gratuity payments, which serve as a form of retirement savings. This benefit is granted to those who have been employed by a company for at least one year. The amount of gratuity you’ll receive depends on several key factors:

• Whether you work in the public or private sector.
• Your basic salary at the time of leaving the company.
• How long you’ve been with the company.

These gratuity payments can be a helpful foundation for retirement savings, but they may not be enough to ensure financial independence in retirement. As an expat, you may also have pension entitlements from your home country, which you’ll need to plan for accordingly. Consulting a financial or tax advisor is crucial to help navigate any tax implications related to drawing pensions from overseas while residing in the UAE.

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What is the Golden Pension Scheme for expats?

The UAE has introduced the Golden Pension Scheme to provide expatriates with a structured way to save for retirement, recognizing the need for long-term financial security for its large expat workforce. Given that there is no mandatory pension scheme for expats, this voluntary program offers a solution to help build retirement savings while working in the UAE.

Who is eligible for the Golden Pension Scheme?

The Golden Pension Scheme is designed for expatriates working in the UAE, including employees from both the private and public sectors. The scheme allows expats to voluntarily participate and start contributing to their retirement fund during their employment period.

Eligibility for the scheme includes:

• Expats working for a UAE-based company or organization: Employees can sign up for the Golden Pension Scheme through their employer, provided the employer has enrolled in the initiative.
• Employees in the private or public sector: The scheme is available to all expatriate employees, regardless of the industry or sector.
• Long-term UAE residents: The scheme is particularly beneficial for those expats intending to remain in the UAE long-term or retire in the country.

How to qualify and contribute to the Golden Pension Scheme

Participating in the Golden Pension Scheme is straightforward for eligible expats, and it involves the following steps:

1. Employer enrollment: Your employer must first be enrolled in the Golden Pension Scheme. Companies can opt to offer this benefit to their expatriate staff, similar to how pension systems function in other countries.
2. Voluntary contributions: As an employee, you can choose to contribute a portion of your monthly salary into the pension fund. Contributions can be as small or as large as you prefer, making it flexible based on your financial situation. Contributions may also be deducted directly from your salary by your employer.
3. Employer contributions (optional): In some cases, employers may choose to contribute to the pension fund alongside employee contributions, offering an additional incentive to participate. While this is not mandatory, it provides a significant boost to retirement savings.
4. Investment options: Once contributions are made, they are invested in various portfolios, providing the potential for tax-free growth. Expats can select from multiple investment options based on their risk tolerance and retirement goals. These funds grow over time, helping build a retirement nest egg.
5. Portability: One of the key advantages of the Golden Pension Scheme is that it allows expats to access their savings if they leave the UAE. Whether they choose to retire abroad or move to another country, their pension can follow them, offering flexibility and security in their long-term financial planning.

Alternative ways expats can save for retirement in the UAE

While gratuity payments are useful, they are only one part of a broader retirement strategy. Expats looking to retire comfortably in the UAE should consider other avenues for building wealth. Here are three effective ways to save for retirement:

1. Investment portfolios: Investing in stocks, bonds, or mutual funds can help grow your wealth faster than a traditional savings account. Although investments carry risks, they typically offer higher long-term returns. Diversifying your investments across different asset classes can help reduce risk and increase your potential for growth over time.

2. Dedicated savings accounts: Opening a savings account specifically for retirement can be an easy way to build wealth steadily. By contributing consistently each month, you can accumulate a significant amount while earning interest. A dedicated account helps keep retirement funds separate, ensuring you don’t accidentally spend money intended for your future.

3. Real estate investments: Many expats consider property investment a smart way to generate rental income during retirement, while also benefiting from property appreciation. Buying property in the UAE or abroad can provide passive income, but keep in mind that real estate is less liquid than stocks and may take longer to convert into cash when needed.

Building a diversified retirement portfolio can offer a safety net, protecting you from market volatility and helping ensure financial security during your retirement years.

How WealthKarma can help you plan for your retirement?

At WealthKarma, we understand that navigating retirement planning as an expat in the UAE can be challenging, with unique financial complexities and a lack of tailored advice. We developed a comprehensive platform designed to simplify every step of your financial journey. Whether you're just beginning to save or refining your retirement strategy. We offer personalized tools, gamified learning, and expat-specific guidance to make retirement planning not only manageable but engaging and rewarding. Here’s what we provide:

Financial Literacy: Our comprehensive, gamified modules simplify key financial concepts, empowering you to build better financial habits. With interactive content and engaging learning tools, you’ll feel more confident navigating your retirement journey.

Personalized Planning: WealthKarma tailors financial health assessments and retirement planning tools to your unique goals and circumstances as an expat. This personalized approach ensures that every step of your plan is designed to fit your individual needs.

Advisor Access: Sometimes, you need expert advice. With WealthKarma, you’ll have on-demand access to certified financial advisors from both your home and local countries, giving you personalized guidance when it matters most.

Goal Setting and Tracking: Set clear retirement goals, track your progress, and receive ongoing advice to keep you on track. Our tools provide actionable recommendations to help you achieve your financial objectives with confidence.

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