While 84% of those surveyed cited the benefits offered by their employer as playing a role in their decision to move to the Gulf, there remains a widespread dissatisfaction with the region’s End of Service Gratuity (EoSG) system a new research finds.

The survey, conducted by Zurich International Life and YouGov, surveyed over 1,500 foreign employees across various sectors in the UAE, Saudi Arabia and Qatar. The survey finds that these one-off severance payments, which are a common practice across the Gulf region, are considered insufficient for meeting retirement needs by 60% of the respondents.

There needs to be reforms to increase satisfaction with the EoSG system in order to maintain the region’s competitiveness as a work destination, according to the survey, that was commissioned by global pensions technology platform Smart.

“The findings clearly show that the current workplace savings system has significant opportunities for change in order to fully meet the needs of today’s expatriate workforce in the GCC,” said Tim Phillips, Managing Director of Smart Middle East & Asia.

The lack of comprehensive pension schemes in the region has been a growing concern among foreign workers who rely on these mechanisms to ensure a stable financial future. Of those polled, 88% said they are actively prioritising retirement savings over other expenses, and 82% said having enough money for retirement is “very important” to them.

The UAE has been working on creating a retirement savings framework for foreign workers, with Dubai International Financial Centre (DIFC) leading the charge. Other countries in the Gulf Cooperation Council (GCC) are likely to follow suit as awareness grows and pressures from the expatriate workforce increase, the research finds.

The urgent need for pension solutions

According to the survey, approximately 66% of foreign workers expressed that a workplace pension scheme would be a valuable addition to their benefits package.

Despite this overwhelming preference, only a small fraction of companies currently offer such schemes, leaving employees to fend for themselves in terms of retirement savings. This gap between employee expectations and employer provisions raises concerns about the long-term financial well-being of expat workers, the research finds.

The GCC which is known for its tax-free income benefits, often lacks formalised pension structures, pushing expats to rely on personal savings or investments. As these individuals plan for the future, they face uncertainty about their ability to maintain their standard of living after retirement.

A competitive edge for employers

Offering workplace pension schemes is not only beneficial for employees but also for employers who seek to attract and retain top talent, the research finds.

The survey findings suggest that a well-structured pension scheme could enhance the attractiveness of companies to foreign professionals. As in a highly competitive job market, especially in sectors such as finance, technology, and healthcare, benefits like pensions can set companies apart from their competitors.

In addition to talent retention, pension schemes can also boost employee engagement and loyalty, the research finds.

Those employees who feel financially secure are likely to be more productive and committed to their employer, according to the research finds. This, in turn, creates a more stable and motivated workforce, reducing turnover and the costs associated with employee churn.