Unlike most developed countries, the UAE has no mandatory pension system in place, so the majority of employees who choose to go back to their home country and retire will likely have to rely solely on their gratuity to get by as they grow older.
UAE gratuity pay not enough for retirement
Retirement crisis looms for most UAE residents due to lack of retirement savings plan.
About eight out of 10 people (83 per cent) in the UAE are now feeling anxious that their gratuity pay won't be sufficient to meet their retirement needs, according to a new study by Zurich International Life.
Gratuity serves as a separation pay for employees at the end of their contract. The amount received depends on the staff’s last basic salary and the length of service. Allowances and other compensation outside the basic salary are usually not included in the gratuity calculation
UAE expatriates said companies only need to increase the gratuity provisions so that they will have more savings to look forward to when they retire.
Ruth, an expatriate from the Philippines who is in her 40s, has been working for the same company for seven years now. She calculated that if she quits her job soon, she will receive about Dh30,000 in gratuity.
"If I retire with that amount of money, that's not going to last me several years. That amount is a joke," she said.
Read more
