GCC countries need to increase the age of retirement and overhaul public pension systems to offset the economic impact of the Covid-19 pandemic and remain sustainable in the long term.
“Pension systems in the GCC are still reliant on government-run, pay-as-you-go defined benefit schemes," said Ebrahim K. Ebrahim, chairman of the Arab Pensions Conference 2020, which is being hosted online from Bahrain this week. "These programmes are quite generous but are increasingly facing funding deficits, making their long-term viability a mounting concern.
“Awareness of long-term savings is limited in the region. The ratio of retired people to working people is set to double in the next three decades. Public finances are going to remain under pressure and this will have implications for our economies,” Mr Ebrahim added.
The combined assets managed by pension funds in the GCC total just over $400 billion, according to Ernst & Young’s GCC Wealth and Asset Management Report 2017.
The World Economic Forum estimated that the combined retirement savings gap is expected to reach $400 trillion by 2050 between eight major economies – Canada, Australia, the Netherlands, Japan, India, China, the UK and US.
Although expatriate workers are paid mandatory end-of-service benefits in the Mena region, such schemes are inadequate as a pension arrangement, Mr Ebrahim added.
“Voluntary pension schemes are possible, but not formally regulated or incentivised," he said. "The range of tailored products available for such savings is minimal.”
Delegates at the conference, which is being held under the theme Towards a Future-proof Regional Pension System, discussed how reforms can be implemented to address the funding deficit and called for the implementation of parametric reforms to build a future-proof pension system. These do not involve fundamentally changing the pension system, but instead recommends making targeted adjustments to its parameters to make it more balanced.
One of the reforms include increasing the retirement age. In Bahrain, for example, the average retirement age of citizens is 48. In the UAE, Emiratis are eligible for pensions after reaching the age of 49. In contrast, the average retirement age for public pensions is 64 in Organisation for Economic Co-operation and Development countries, Simon Herborn, an associate partner at professional services firm Aon, told the conference.
“These young retirement ages in the GCC were viable a few decades ago, but no longer," he said. "The rise in life expectancy means pensions need to be paid out for longer. Also, falling fertility rates mean that the number of working age people paying contributions is growing at a slower rate.”
Another proposed change is to pay lower pensions to retirees. Regional schemes currently have very generous pension plans relative to other parts of the world.
The rise in life expectancy means pensions need to be paid out for longer. Falling fertility rates mean that the number of working age people paying contributions is growing at a slower rate
Across the 37-member OECD countries, pensions are projected to be 59 per cent of a person's final pay after a career of 35 to 40 years. In comparison, most GCC retirees receive much higher pensions and from a much younger age. For example, in Saudi Arabia, a citizen can retire after 25 years of service and receive a pension at about 65 per cent of their final salary, Mr Herbon said.
He also suggested that members, employers or the government put more funds into the pension system. Although current pension contribution rates across the Mena average 15 to 25 per cent of pay, higher rates are needed because people in the region retire earlier. “Other countries also have income tax, which helps cover pension costs,” Mr Herborn said.
In the UAE, for instance, an eligible Emirati employee is required to contribute 5 per cent of their monthly salary and the government employer is required to contribute 15 per cent. For private sector employees, employers would pay 12.5 per cent, with an additional 2.5 per cent being contributed by the government to the pension.
“Parametric reforms are only one component of overall solutions for financial sustainability. The GCC governments should try to cultivate other forms of retirement savings,” Mr Herborn said.
He added that the state alone cannot be responsible for providing all retirement benefits. This must be topped up by personal savings and employee-linked savings such as the DIFC Employee Workplace Savings in Dubai, KiwiSaver in New Zealand, National Employment Savings Trust in the UK and the National Pension Scheme in India.
Although the “pace of change has been slow in the Mena, Jordan, Oman and Bahrain have made progress on some parametric reforms”, Mr Herbon added.
Meanwhile, Covid-19 has had a wide-ranging impact on defined benefit pension funds, said Philip Wheeler, senior manager and pensions actuary at Ernst and Young. "Pension contributions and investment returns must at least equal benefit payments and expenses to achieve financial balance," he added.
“The biggest impact on the finances of pension funds is due to the effect on investment returns, which contribute two-thirds to the actual assets of the fund and tend to be highly volatile,” he said at the conference.
The%20specs
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WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
HIJRA
Starring: Lamar Faden, Khairiah Nathmy, Nawaf Al-Dhufairy
Director: Shahad Ameen
Rating: 3/5
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
Panipat
Director Ashutosh Gowariker
Produced Ashutosh Gowariker, Rohit Shelatkar, Reliance Entertainment
Cast Arjun Kapoor, Sanjay Dutt, Kriti Sanon, Mohnish Behl, Padmini Kolhapure, Zeenat Aman
Rating 3 /5 stars
Tottenham's 10 biggest transfers (according to transfermarkt.com):
1). Moussa Sissokho - Newcastle United - £30 million (Dh143m): Flop
2). Roberto Soldado - Valencia - £25m: Flop
3). Erik Lamela - Roma - £25m: Jury still out
4). Son Heung-min - Bayer Leverkusen - £25m: Success
5). Darren Bent - Charlton Athletic - £21m: Flop
6). Vincent Janssen - AZ Alkmaar - £18m: Flop
7). David Bentley - Blackburn Rovers - £18m: Flop
8). Luka Modric - Dynamo Zagreb - £17m: Success
9). Paulinho - Corinthians - £16m: Flop
10). Mousa Dembele - Fulham - £16m: Success
Sweet%20Tooth
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Anxiety and work stress major factors
Anxiety, work stress and social isolation are all factors in the recogised rise in mental health problems.
A study UAE Ministry of Health researchers published in the summer also cited struggles with weight and illnesses as major contributors.
Its authors analysed a dozen separate UAE studies between 2007 and 2017. Prevalence was often higher in university students, women and in people on low incomes.
One showed 28 per cent of female students at a Dubai university reported symptoms linked to depression. Another in Al Ain found 22.2 per cent of students had depressive symptoms - five times the global average.
It said the country has made strides to address mental health problems but said: “Our review highlights the overall prevalence of depressive symptoms and depression, which may long have been overlooked."
Prof Samir Al Adawi, of the department of behavioural medicine at Sultan Qaboos University in Oman, who was not involved in the study but is a recognised expert in the Gulf, said how mental health is discussed varies significantly between cultures and nationalities.
“The problem we have in the Gulf is the cross-cultural differences and how people articulate emotional distress," said Prof Al Adawi.
“Someone will say that I have physical complaints rather than emotional complaints. This is the major problem with any discussion around depression."
Daniel Bardsley
The specs: 2018 Audi Q5/SQ5
Price, base: Dh183,900 / Dh249,000
Engine: 2.0L, turbocharged in-line four-cylinder / 3.0L, turbocharged V6
Gearbox: Seven-speed automatic / Eight-speed automatic
Power: 252hp @ 5,000rpm / 354hp @ 5,400rpm
Torque: 370Nm @ 1,600rpm / 500Nm @ 1,370rpm
Fuel economy: combined 7.2L / 100km / 8.3L / 100km
Zayed Sustainability Prize
WORLD CUP FINAL
England v South Africa
Yokohama International Stadium, Tokyo
Saturday, kick-off 1pm (UAE)
About Housecall
Date started: July 2020
Founders: Omar and Humaid Alzaabi
Based: Abu Dhabi
Sector: HealthTech
# of staff: 10
Funding to date: Self-funded
UAE cricketers abroad
Sid Jhurani is not the first cricketer from the UAE to go to the UK to try his luck.
Rameez Shahzad Played alongside Ben Stokes and Liam Plunkett in Durham while he was studying there. He also played club cricket as an overseas professional, but his time in the UK stunted his UAE career. The batsman went a decade without playing for the national team.
Yodhin Punja The seam bowler was named in the UAE’s extended World Cup squad in 2015 despite being just 15 at the time. He made his senior UAE debut aged 16, and subsequently took up a scholarship at Claremont High School in the south of England.
Fixtures:
Thursday:
Hatta v Al Jazira, 4.55pm
Al Wasl v Dibba, 7.45pm
Friday:
Al Dhafra v Al Nasr, 5.05pm
Shabab Al Ahli Dubai v Al Wahda, 7.45pm
Saturday:
Ajman v Emirates, 4.55pm
Al Ain v Sharjah, 7.45pm
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
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One-off T20 International: UAE v Australia
When: Monday, October 22, 2pm start
Where: Abu Dhabi Cricket, Oval 1
Tickets: Admission is free
Australia squad: Aaron Finch (captain), Mitch Marsh, Alex Carey, Ashton Agar, Nathan Coulter-Nile, Chris Lynn, Nathan Lyon, Glenn Maxwell, Ben McDermott, Darcy Short, Billy Stanlake, Mitchell Starc, Andrew Tye, Adam Zampa, Peter Siddle
Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
HAJJAN
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Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
NBA Finals results
Game 1: Warriors 124, Cavaliers 114
Game 2: Warriors 122, Cavaliers 103
Game 3: Cavaliers 102, Warriors 110
Game 4: In Cleveland, Sunday (Monday morning UAE)
Scores in brief:
Day 1
New Zealand (1st innings) 153 all out (66.3 overs) - Williamson 63, Nicholls 28, Yasir 3-54, Haris 2-11, Abbas 2-13, Hasan 2-38
Pakistan (1st innings) 59-2 (23 overs)
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
