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Pensions and Retirement Planning when Working in the Gulf

The rich countries in the Middle East, such as Qatar, Kuwait, Saudi Arabia and particularly the UAE, have a reputation as places where qualified expatriates can earn a lot of money and enjoy a life of luxury. One thing that all these countries have in common is that a vast majority of expats don’t intend to stay indefinitely and retire here. This, at least for western expats, is mostly due to cultural differences, living costs and the fact that it is extremely hard to get and maintain residency without working here, let alone citizenship. Pensions-for-expats-02 Coming to Save Money and Leaving without the Savings When first coming to a place like Dubai, a large number of expats are planning to work hard for a few years, take advantage of the high salaries and employee benefits (not to forget the absence of taxes) and then move on with accumulated savings and a better looking CV. For some of them, a few years may turn into a decade or more, as new opportunities arise and as they find themselves enjoying the rich expat lifestyle. Nevertheless, eventually most people will leave. On their way out, many expats realize that their original goal of saving as much as possible has not been achieved. Although your salary is high, so are living costs and, more importantly, the constant peer pressure and opportunities to spend. Avoiding this trap requires self-discipline and planning. Pensions Not Compulsory and Often Ignored One thing many expats neglect is pensions. Many employers in the Middle East offer pension schemes as part of their expat benefit packages, but typically they are not mandatory to participate in (legislation that should change this is being prepared in the UAE, although the details are not entirely clear yet). Moreover, some expats get discouraged by the complexity of pension transfers and having to comply with laws in both their new country of residence and their original home country. This is not only a wrong reason for not saving for retirement, but it can also cause unnecessary taxes and other problems when returning to your home country, especially when you had left an existing pension plan or other investments behind when you were leaving for the Gulf. Actively Taking Responsibility for Your Finances Regardless of the country you are currently living in, but especially when that country is different from your home country and has rules and regulations which you are not entirely familiar with, it is essential to take full responsibility for getting your finances in order and actively look for answers to any questions and uncertainties. You should always have at least a rough financial plan not only for the next few months, but also for the more distant future. Taking care of your pension and retirement savings should be among top priorities, as even seemingly small decisions and small amounts will add up and have huge effect on the quality of your and your family’s life many years from now. Where to Look for Information Although you can find a lot of information online and can use that to get basic understanding of the rules and available solutions, keep in mind that regulations concerning expat pensions and finances are specific to individual countries and cases and, more importantly, they change very often. Your employer can be an invaluable source of information and assistance, especially when they have experience with employing other expats from your home country. Besides that it is often useful to consult a financial professional specializing in expat financial planning and pensions, ideally familiar with the financial industry and regulations in both your current country of residence and your home country.      

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