Monday, Oct 31, 2011
(Updates with comments from Friends Provident in paragraphs 6 and 7)
DUBAI (Zawya Dow Jones)--Retirement savings plans for expatriates living in the Arab Gulf region require an overhaul because the current system is inadequate for companies, employees and the region's wider economy, a survey published on Monday showed.
"The current system is failing three key groups: companies, staff and the wider economy," said Nigel Sillitoe, managing director of Insight Discovery, a boutique research firm. He adds the Gulf countries lack an organized system to provide adequate retirement plans for expatriates.
Most Gulf employers currently offer some form of gratuity, whereby employees are paid around 8% of their annual salary when their work contract is terminated.
"The dangers of this system became apparent during the recent economic slowdown, when some companies in the region faced financial difficulties and were unable to pay end of service benefits," according to the report.
Respondents to the survey are proposing a system for the Gulf that combines elements of Western pensions--regular contributions from both employers and staff, ring-fencing funds, professional asset management and custodial services, strong regulation--with the private savings schemes already offered by banking, finance and insurance companies in the region.
"We would welcome a well regulated pensions system that enables employers and employees to save efficiently, with the ultimate aim of providing both parties with a secure financial future," said Nicola Lonergan, corporate proposition development manager at Friends Provident International.
"We urge employers to consider a funded group arrangement now, to both manage liabilities and set the benchmark in terms of employee benefits on a global scale," she added.
-By Nicolas Parasie, Dow Jones Newswires; +9714 446-1681; nicolas.parasie@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
31-10-11 0930GMT
