Savings and retirement attitudes survey
Middle East and North Africa
Savings and retirement attitudes survey
Middle East and North Africa
Contents
Executive summary
4
Survey highlights
4
Overview of public and private pensions in the
Middle East and North Africa
5
Financial situation
7
Retirement
11
Benefits preferences
15
Conclusion
17
About the survey
18
Savings and retirement attitudes survey – Middle East and North Africa 3
Executive summary
The emerging and frontier markets of the Middle East and North Africa
(MENA) are seen by many as a land of opportunity. Countries in the
region weathered the financial storm of the recession, and the Arab
Spring that has cast a long shadow of uncertainty on the region. Yet
working in the region is seen as a lucrative opportunity in the rest
of the world, with high salaries, low taxes and the potential to save
enough for a lifetime. However, are these true opportunities or false
misconceptions that have flourished due to great oil wealth in some
parts of the region that people elsewhere associate with the region
as a whole?
As part of its global savings and retirement attitudes survey research,
Towers Watson commissioned a survey of employees in the MENA region.
The survey findings examine what the concerns of employees in the region
are, as well as identify their saving behaviour, preferences in relation to
employment benefits, and readiness for retirement.
Survey highlights
•• There is a low level of saving in the region,
defying the myth that employees save a large
proportion of their income. Savings rates in
the Middle East are considerably low when
compared to the emerging markets of India
and China.
•• A majority of respondents highlight housing as
a major concern; this is also reflected in the
choice of savings vehicles, where land and
property is the preferred vehicle for saving by a
majority of respondents.
•• With global economic uncertainty in mind, it is
unsurprising to find that a significant percentage
of employees cite precautionary savings as a
motivation to save.
•• There is uncertainty among many individuals
about their plans for retirement and widespread
concern about whether current standards of
living can be preserved in retirement. This is
reflected by the number of respondents that
expect to work later in life in order to maintain
current standards of living in retirement.
4 towerswatson.com
•• Despite these concerns for retirement, the
survey finds that day to day issues rank higher
than retirement as a driver for saving. When
comparing Gulf Cooperation Council (GCC)
expatriates and nationals, the survey highlights
that saving for retirement is more important to
expatriates than to nationals.
•• Despite concerns for the sustainability of public
pensions in the region, government pensions
and end-of-service benefits are cited as the top
two sources of retirement income.
•• In terms of benefits preferences, we see that
expatriates have a higher preference for larger
bonuses and pay increases, and better health
coverage to more retirement income when
compared to nationals.
Overview of public and private pensions
in the Middle East and North Africa
Public pension reserves
Public pension schemes are the primary source
of retirement income in the Middle East and
North Africa (MENA) region. Whereas private
pensions do not seem to be as prevalent, they
are either in their nascent stages or completely
absent. Public pensions in the region use Pay
as You Go (PAYG) as their dominant financing
mechanism. Only Egypt and Morocco seem to
have pre-funded schemes that are invested in
public bonds. The long-term development of
public pensions is determined by:
•• The extent to which they reach maturity
•• The benefits they offer
•• The return on investments
According to projections made by the World
Bank, most public reserves will be depleted if
changes and reforms to the current schemes
are not implemented. The depletion of public
reserves can be attributed to an aging
population, inconsistent system design and
poor management. In terms of design, these
public funds have permissive early retirement
rules and high replacement rates, as well as
high implicit rates of return on the contributions
(see Figure 01). These design issues not only
make these funds unsustainable, but also
pose an obstacle to the development of
private pensions.
Investment processes are neither defined nor
disclosed, and information to fund members on
portfolio composition is treated as confidential.
Many of these issues can be accounted for
by the inadequacy of financial institutions,
ineffective governance of pension funds,
interruptions in defining investment policy and
absence of professional portfolio management,
which results in asset allocations that are
inconsistent with asset-liability management
(ALM) principles. Further, best practice is in
favour of the independence of pension fund
management from the state but this is rarely
the case in MENA.
Figure 01. Gross replacement rates by levels of earnings and region
Level of earnings
and region
Average earnings
MENA
OECD
ECA
LAC
Low earnings
MENA
OECD
ECA
LAC
High earnings
MENA
OECD
ECA
LAC
Mean
Minimum
Maximum
77.9
56.4
56.4
57.2
37.5
30.6
38.4
36.0
115.5
101.9
87.2
102.6
81.3
74.6
63.7
77.7
42.5
47.3
47.3
39.1
132.0
115.5
96.2
105.3
75.7
46.4
50.4
48.3
37.5
15.3
25.4
29.4
115.5
95.2
75.4
89.0
Source: Robalino (2005)
Savings and retirement attitudes survey – Middle East and North Africa 5
Private pensions
Figure 02. Private pension fund’s portfolio composition
Private pension funds have not been able to
progress in the region due to the underdevelopment
of financial institutions as well as competition
from public schemes that offer benefits well
above international benchmarks in generosity
(as shown in Figure 01) and that will ultimately
prove unsustainable.
Egypt is the only state where a funded pillar
will be a part of mandatory pensions moving
into the future 1 . In Jordan, there are also some
signs emerging of private occupational plans.
The presence of a large expatriate community in
the Gulf Cooperation Council (GCC) may lead to
the introduction of funded schemes to finance
pensions. On the whole, growth in private pensions
is still expected to be low and will depend upon
reforms to the public pension systems and the
development of financial institutions.
According to the World Bank 2 the following criteria
could play an important role in fostering the
development of private pensions:
•• Macroeconomic development and policy
•• Sufficiently sophisticated financial products
and institutions
•• Appropriate regulations and supervisory controls
Only Morocco, Egypt and Jordan have the basic
required level of financial sophistication such as
the existence of regulations, accounting, auditing,
valuation, payment systems and availability of
financial instruments. The insurance authority is in
charge of private pension supervision in Egypt and
Jordan. Therefore, schemes are subject only to
general rules meant for insurance companies and
exempt from regulations if the plan administrators
do not operate under the insurance industry.
Data is limited on private pension funds in the
region, however some data exists for both Egypt
and Jordan. Figure 02 indicates that in both
countries the standard asset-liability portfolio
management strategy is not in use. Private
pension portfolios in Egypt have a larger share in
fixed income and liquid instrument(s). Although
Jordan reflects a higher concentration in equities,
loans to members and real estate represent an
even greater portion of the portfolios.
Asset class
Fixed income
Cash and CDs
Real estate
Loans
Equity
Others
Egypt
70.5
23.8
0.4
1.3
2.6
1.5
Jordan
0.0
9.8
26.0
40.9
18.0
5.3
Source: DeMarco (2011)
There are a lot of conditions that need to be met
for growth. For instance, many of the assumptions
rely upon the ability of the financial sector to
absorb an increase in private savings and on costs
of intermediation. A small insurance sector, limited
long-term savings products offered by insurance
companies, and a lack of supervision are also
barriers to developing private pensions. It is
relevant to mention here that emerging economies
have faced significant constraints in the capacity
of the financial sector to absorb and intermediate
savings from voluntary plans and direct them
toward productive investments.
As for the GCC, some countries are considering
schemes that would provide benefits similar to
those of national workers but under a financing
mechanism that would ensure that it would not
burden public finances. Such a development may
lead to an increase in private pension funds in
the region.
Eventually the development of private pensions
will depend on a range of factors such as social
preferences, commitment to adopt reforms and an
enabling environment.
1 T his is apart from the West Bank and Gaza, where a funded though
non-operational pension component was introduced legally.
2 See DeMarco (2011).
“Egypt
“
is the only state where a funded pillar will be a part of
mandatory pensions moving into the future.”
6 towerswatson.com
Financial situation
Having considered the general state of pensions
in the region, and taking into account the current
global economic climate and political instability
in the region, it is not surprising that 70% of
respondents have reviewed their savings and
investments over the past 12 months. Nearly half of
respondents (49%) report being satisfied with their
financial status, while a third (33%) are unsatisfied.
In fact, 46% claim that day-to-day worries hinder
their performance at work, while a third claim that
retirement concerns keep them from doing their
best in the workplace. This suggests that current
concerns occupy employees in the region more than
retirement issues.
These worries appear to be affecting employee
engagement in the workplace. In response,
employers may consider investigating what these
specific worries are and what measures can be
put in place to alleviate them, or at least mitigate
their impact on employees’ performance. Despite
the various worries occupying employees, 45%
are confident that they will be able to afford any
healthcare-related expenses that may arise.
When it comes to retention, it seems that there is a
weak correlation between staying with an employer
for the next two years and satisfaction with current
financial situation as well as confidence about
affording healthcare.
More than two-thirds of respondents (68%) agree
that they would most likely stay with their current
employer for the foreseeable future. However, when
we look at responses by age group we find that
although still a high proportion of employees would
most likely remain with their current employers,
older workers seem to be more likely to do so than
younger cohorts.
Figure 03. Financial situation – MENA
Age group
All
Age 20–29
Age 50–59
Reviewed savings over past 12 months
70%
69%
72%
Continue with employer for minimum of
two years
68%
62%
82%
Satisfied with where I am today
49%
47%
56%
Day-to-day worries hinder performance
46%
47%
37%
Confident about affording healthcare
45%
45%
45%
Retirement concerns hinder performance
33%
30%
30%
Savings and retirement attitudes survey – Middle East and North Africa 7
Low level of savings
Working in MENA is often seen as a lucrative
opportunity by people in other parts of the
world. It is generally perceived as a region where
employees are well-rewarded and save a high
proportion of their income. However, the survey
highlights that over a quarter (28%) of respondents
do not save anything at all, and more than half
(55%) save less than 10% of their income: this may
be due to the inclusion of Egypt and the Levant
in the sample. However, when we look at only the
GCC countries we still see this pattern: over a
fifth do not save anything, and almost half save
less than 10% of their earnings. This contradicts
the impression that residents of the GCC save
a significant proportion of their income and is
surprising given the prolonged global economic
uncertainty. When comparing GCC expatriates to
GCC nationals we see a similar trend with less
than a fifth (19%) of expatriates saving anything at
all compared to 28% of GCC nationals.
Figure 04. Percentage of income saved
All (MENA)
GCC nationals
GCC expats
Age group
Age 20–29 (GCC)
Age 50–59 (GCC)
0% – Did
not save
anything
at all
28%
28%
19%
1%–9%
10%–19%
20%–29%
30%–39%
40%–49%
50% or
more
27%
30%
26%
19%
18%
21%
9%
9%
12%
6%
6%
7%
5%
4%
7%
7%
5%
9%
24%
17%
28%
19%
18%
25%
10%
14%
4%
9%
7%
9%
9%
6%
The average savings rate for the entire respondent
profile is 13.88%, whereas in the GCC we find that
it increases slightly to 15.37%. GCC expatriates
have a savings rate of 16.89% compared to
nationals who save just 12.27% of their income 3.
Interestingly, we find that the savings rates in
the emerging markets of China and India are
considerably higher at 27% and 22% respectively4.
When looking at these responses by age group, we
see that the results are by and large consistent.
The only noteworthy difference is that there is a
significantly lower proportion of respondents in the
50+ group that indicate they save less than 10%
of their income (36%), compared to the 20–29 age
group (52%).
Only 27% of the entire respondent pool save 20%
or more of their income. The responses indicate
that the older expatriates in the region save the
most, where 43% of GCC expatriate respondents
aged 50+ indicate that they save 20% or more of
their earnings.
3 T his is based on the assumption that the 50%+ savings rate averages
to 54.5% for that group of respondents. The numbers do not change
significantly when this is increased to 60% and 70% of income for that
group of respondents.
4 T owers Watson Savings and Retirement Attitudes Survey, China
and India.
“The
“
survey highlights that over a quarter of respondents do
not save anything at all.”
8 towerswatson.com
In addition to these savings rates, we find that
the value of savings seems to be rather low. A
substantial proportion of respondents (45%) have
savings of less than $5,000, with 13% reporting
savings between $5,000 and $10,000, and a
further 10% reporting savings between $10,000 and
$20,000 (that is, 68% of respondents have savings
of less than $20,000). The pattern of savings is as
expected with older respondents accumulating more
than the younger respondents. When we calculate
the average savings, we find that it is around the
$45,000 mark for the region overall. Savings and
investments average $56,000 for expatriates in the
GCC, and $43,000 for GCC nationals 5.
Motivation and modes of savings
Respondents ranked housing needs, precautionary
savings and children’s education as the top drivers
for saving (25%, 19% and 16% respectively).
As expected, there are generational differences
in the motivation to save. Younger cohorts save
to get married and acquire a home, whereas older
cohorts save to fund their children’s education and
for retirement. All age groups seem to accumulate
savings for a rainy day, as indicated by a great
proportion of respondents choosing precautionary
savings as a motivation to save.
There are also significant differences between
nationals and expatriates in the GCC. Nationals
seem to save predominantly for housing needs,
whereas expatriates save for housing needs and
children’s education. The responses also highlight
that saving for retirement is more important to
expatriates than it is to nationals in the GCC 6.
5 B
ased on the assumption that the highest bracket has savings and
investments worth $550,000.
6 T hese results are confirmed by a series of logistic regressions for the
Surprisingly, saving for retirement comes in
seventh place with only 7% of respondents
indicating it as their top reason to save. This
suggests that retirement is not an immediate
worry for employees and comes only after more
current concerns.
identification of motivation to save. The regressions account for age,
location, nationality (national or expatriate), as well as income level.
Figure 05. Total current value of savings
10,000 to
19,999
(US$)
20,000 to
29,999
(US$)
30,000 to
39,999
(US$)
40,000 to
49,999
(US$)
50,000 to 100,000 to
199,999
99,999
(US$)
(US$)
200,000
or more
(US$)
Less than
5,000
(US$)
5,000 to
9,999
(US$)
MENA
45%
13%
10%
6%
5%
4%
6%
5%
6%
GCC
nationals
49%
10%
10%
6%
5%
5%
4%
4%
6%
GCC
expats
31%
14%
11%
8%
7%
4%
8%
7%
9%
Figure 06. Motivation for saving
Housing needs
Medical
expenses
Own marriage
Retirement
Children’s
education
Children’s
marriage
General savings
Wealth
accumulation
Precautionary
Age group (MENA)
Age 20–29
Age 50–59
23%
10%
3%
5%
MENA
25%
3%
GCC nationals
37%
2%
GCC expats
23%
3%
10%
7%
16%
10%
5%
7%
7%
10%
21%
25%
3%
7%
17%
24%
3%
2%
3%
1%
12%
8%
9%
8%
12%
7%
10%
11%
10%
5%
4%
19%
18%
16%
17%
22%
Savings and retirement attitudes survey – Middle East and North Africa 9
Given the findings of respondents’ motivation to
save, we explore the top three vehicles used for
savings and investment, and find that a third place
their funds in savings accounts, 19% save in the
form of land and property investments, 16% make
bank deposits, while 15% invest in gold and silver.
More than a quarter (29%) save using vehicles other
than those listed in Figure 07. This is consistent
with the motivations for savings outlined above.
Placing savings in deposit and savings accounts
as well as purchasing gold and silver align with a
precautionary savings motive, since this requires
liquid assets (that is, those which can be called
upon quickly). Housing is a major concern in
the region, especially where two-thirds of the
respondents do not own the properties that they
live in; these concerns are also highlighted where
we see that a quarter of respondents invest in
land and property.
Land and property ranks first in importance of
current savings, with 32% of all respondents
choosing it as a means to save. It is also the
preferred vehicle when all top three choices are
aggregated, with 60% of respondents selecting
it in their top three savings vehicles.
Interestingly, when we look at what is ranked first
as a vehicle for savings in the GCC, we find that
although profiles are similar, a higher percentage
of nationals invest in company shares. We also see
that expatriates opt to hold more bank deposits
compared to nationals. This pattern may be an
artefact of business ownership laws in the GCC, as
well as an incentive for expatriates to accumulate
deposits for future transfer to their home countries.
The majority of respondents (73%) hold most of their
savings in their country of residence, compared to
26% holding their savings in their home country.
The pattern is similar to where these savings were
held 12 months prior to the survey, where 76% held
their savings in their country of residence and 23%
in their home country. Looking at expatriates in the
GCC this becomes quite noticeable with a shift from
47% holding their savings in their home countries
to 53% twelve months later. Notably the shift is
towards home country, where this repatriation of
savings possibly reflects concerns about the political
situation in the region with the eruption of the Arab
Spring in early 2011.
Figure 07. Savings vehicles
Bonds
Company shares
Mutual funds
Insurance policies
Bank deposits
Savings account
Gold and silver
Jewellery
Land and property
Invest in business
Other
None of the above
Savings vehicles over
the last 12 months
(MENA)
6%
11%
7%
6%
16%
34%
15%
8%
19%
7%
3%
29%
Current savings
vehicles
(MENA)
3%
4%
2%
2%
8%
17%
17%
4%
32%
8%
3%
-
Current savings
vehicles
(GCC nationals)
3%
10%
3%
1%
6%
20%
11%
3%
31%
9%
3%
-
Current savings
vehicles
(GCC expats)
4%
2%
3%
2%
10%
14%
18%
4%
34%
6%
2%
-
Figure 08. Location of majority of savings
Current location of savings
Country of
residence
Home
country
Other
Location of savings 12 months ago
Country of
residence
Home
country
Other
MENA
73%
26%
1%
76%
23%
1%
GCC residents
61%
37%
2%
66%
33%
1%
GCC expats
45%
53%
2%
51%
47%
2%
10 towerswatson.com
Retirement
More than two-thirds of respondents (67%) plan to retire before the age of 65. This calls into question
whether expectations of workers in the region are realistic, especially given that savings for retirement
ranks seventh in employees’ motivation to save.
Naturally enough, we see that younger workers are more optimistic about their retirement age than older
workers, given that younger employees have more time to build their finances for retirement. Younger
employees may, of course, need to adjust their expectations upwards in the future. The mode of the
retirement age in the region is the same for all age groups, and is expected to be between the ages of
60–65. Figure 09 provides a full breakdown of expected retirement ages in the region.
Figure 09. Expected retirement age – MENA
Expected age of retirement
0
10
Unsure
20
6
14
70+
5
5
Percentage
30
40
10
18
20
12
60–64
34
55–59
5
60
6
65–69
50–54
1
50
8
58
38
12
13
6
Under 50
0
12
15
 Age 50–59  Age 20–29  All
Location of retirement
The majority of respondents (54%) plan to retire in their current country of residence. When we
focus on the GCC, we see that this falls to 42% which can be explained by the high percentage of
expatriates in the workforce. Expatriates in the GCC mostly plan to return home and retire, where 62%
indicated that this was their plan. Less than a fifth (19%) of GCC expatriates plan to retire in their
current country of residence.
Figure 10. Expected location of retirement – GCC expatriates
 19%
 62%
 4%
 15%
Country of residence
Home country
Other
Unsure
Savings and retirement attitudes survey – Middle East and North Africa 11
Despite global economic uncertainty, many
workers in the region are confident about having
a financially comfortable retirement. We find that
in terms of standards of living in retirement, more
than half (53%) believe that their standard of living
will be unchanged or improve. One-fifth (21%) are
uncertain what their standard of living will be in
retirement, while alarmingly over a quarter (26%)
expect their standard of living to decline.
So what poses a risk to this standard of living in
retirement? The majority of respondents (72%) cite
rising living costs as their primary concern, with
the age cohort currently closest to retirement most
likely to cite this.
Insufficient retirement funds (42%) followed,
with the age group 40+ more likely to be
concerned about the adequacy of their retirement
funds, whereas expatriates and those in the
highest earning brackets were less likely to be
concerned about this. Surprisingly, those in the
highest earning brackets and expatriates were
more likely to be concerned with emergency costs.
Medical bills and political instability pose a risk for
29% and 27% of respondents respectively.
Figure 11. Expected standard of living during retirement compared
to pre-retirement – MENA
Percentage
0
10
20
A lot worse
9
A little worse
17
About the same
27
A little better
14
A lot better
12
Do not know
21
Figure 12. Risks to standard of living in retirement – MENA
Percentage
0
20
40
80
72
Unexpected costs
38
Medical bills
29
Inadequate state support
24
Insufficient funds
42
Insufficient family resources
8
Crash in house prices
4
Foreign exchange risk
10
Political instability
27
Other
112
12 towerswatson.com
60
Rising living costs
Poor returns on savings
11
“Despite
“
global economic
uncertainty, many workers
in the region are confident
about having a financially
comfortable retirement.”
30
100
Inadequate retirement funds
Just under one-fifth of respondents (19%)
indicate that end-of-service benefits will be the
first source of retirement funds, followed by
government pensions (18%) and property (17%).
The reliance on government pensions is not
surprising given that replacement rates in the
region are high compared to other parts of the
world. However, this does not mean that these
government pensions are adequate, or in fact
sustainable, at current levels. Interestingly, we
see that retirement savings products rank at the
bottom of the list of options, even after family
resources and inheritance. This is perhaps due to
the undeveloped retirement savings industry in the
region. In the GCC we see that expatriates rank
other savings and investments significantly higher
than nationals (15% and 5% respectively).
To sustain current standards of living, more than
half of respondents (52%) agree that they will have
to work later in life and delay their retirement.
The majority (73%) believe that they will have to
save substantially more to maintain their standard
of living in retirement. These results hint at the
inadequacy of retirement savings and planning in
the region, and reiterate that the earlier responses
regarding retirement age may have been
optimistic. The conventional wisdom that a family
safety net will look after the elderly may not be
true as a high proportion (68%) of those surveyed
indicates that children cannot be relied upon to
provide for parents. This pattern holds for both
nationals and expatriates of GCC countries.
Just over two-fifths (42%) of respondents have
calculated what they would need for a comfortable
retirement. This, however, varies from 39% for
those aged 20 to 29 to 54% for those aged
50 to 59. On closer inspection of the data this
proportion increases to around the 40% mark
for the 20 to 40 age group, and then jumps to
around 55% for those aged 50+. We find that 45%
would be willing to give up more of their current
pay for a guaranteed retirement income. Only
36% believe they will have enough money for a
comfortable retirement, and a similar 33% believe
that they would be able to easily afford healthcare
expenditure in that phase of their lives.
Given the lack of adequate retirement funds,
it would make sense for employers to offer
retirement benefits as part of their employee value
proposition to attract and retain talent. Yet nearly
two-thirds of respondents (61%) indicate that
their employers do not offer any such retirement
plans, and 11% are unsure whether their employer
provides any retirement benefits or not. Where
retirement plans are provided, most respondents
(87%) are enrolled.
Figure 13. Retirement outlook – MENA
Percentage
0
10
20
30
40
50
60
70
80
90
100
Easily afford healthcare expenditures
33
36
32
Have enough for a comfortable retirement
36
39
34
Calculated needs for a comfortable retirement
42
39
54
Willing to sacrifice current pay for guaranteed income in retirement
45
42
34
50
38
Retire or work later in life
52
50
56
Harder for children to support parents
65
Save more to maintain standard of living
58
68
76
73
72
77
 All  Age 20–29  Age 50–59
Savings and retirement attitudes survey – Middle East and North Africa 13
The majority of respondents (77%) indicate that
their employer provides private medical cover, and
more than a quarter (26%) have other additional
supplementary healthcare cover (18% purchase
their own, while 8% are entitled through a spouse,
parent, or other relation). Out of pocket healthcare
expenses are borne by 53% of respondents. The
majority (76%) pay for these costs out of their
salary, while 30% use some of their savings and
12% borrow money from friends and family.
Figure 14. Sources of retirement income
Percentage
0
5
10
15
20
25
30
End-of-service benefit
19
17
21
Government pension
18
29
7
Property
17
16
Working after retirement
13
13
Other savings and investments
11
5
14
15
Family business
4
Family support
6
3
7
9
9
Inheritance
5
4
4
Retirement savings products
3
3
4
Other
1
1
1
 All (MENA)  GCC nationals  GCC expats
14 towerswatson.com
21
35
Benefits preferences
and current healthcare coverage, it seems that
respondents are torn; 36% prefer higher retirement
income with less generous health insurance, while
38% prefer to combine lower retirement income with
more generous health coverage during employment.
Our survey asked employees to rate trade-offs
between hypothetical options in their pay packages.
Their answers uncover a clear picture of which
rewards and benefits employees value most.
The majority of respondents prefer a larger pay
increase today with a smaller future bonus; at
the same time 43% would sacrifice a smaller pay
increase today for a higher income in retirement: this
reiterates employees’ concerns about a comfortable
retirement. Similarly, 48% prefer to combine smaller
bonuses today with a higher retirement income.
Retirement security emerges again as a valued
factor, with 38% of respondents citing a preference
for higher income in retirement, even if it comes with
associated risk.
There is a significant difference between GCC
expatriates and nationals, with expatriates preferring
a lower income in retirement for larger bonuses and
pay increases.
When it comes to medical coverage, 41% prefer
to combine smaller pay increases today with more
generous healthcare coverage. However, when it
comes to a choice between retirement income
Figure 15. Benefits preferences – MENA
Percentage
0
10
20
30
40
50
60
70
80
90
100
Greater pay increase and lower retirement income
34
22
43
Higher retirement income and less generous health insurance
36
26
38
Larger bonus today and lower retirement income
30
22
48
Larger pay increase and less generous health insurance
35
25
41
Lower guaranteed retirement income versus risky higher income
31
31
38
Larger pay with lower bonus
52
18
30
 Agree  Neither  Disagree
“The
“
majority of respondents prefer a larger pay increase
today with a smaller future bonus; at the same time 43%
would sacrifice a smaller pay increase today for a higher
income in retirement: this reiterates employees’ concerns
about a comfortable retirement.”
Savings and retirement attitudes survey – Middle East and North Africa 15
Figure 16a. Benefits preferences – GCC nationals
Percentage
0
10
20
30
40
50
60
70
80
90
100
Greater pay increase and lower retirement income
24
24
51
Higher retirement income and less generous health insurance
35
27
38
Larger bonus today and lower retirement income
21
23
56
Larger pay increase and less generous health insurance
23
32
45
Lower guaranteed retirement income versus risky higher income
32
29
39
Larger pay with lower bonus
46
20
34
 Agree  Neither  Disagree
Figure 16b. Benefits preferences – GCC expats
Percentage
0
10
20
30
40
50
60
70
80
90
100
Greater pay increase and lower retirement income
39
21
39
Higher retirement income and less generous health insurance
37
26
37
Larger bonus today and lower retirement income
37
21
42
Larger pay increase and less generous health insurance
37
26
36
Lower guaranteed retirement income versus risky higher income
32
33
35
Larger pay with lower bonus
52
19
29
 Agree  Neither  Disagree
We find differences in all benefits trade-offs when
we look at respondents by age group. Younger
cohorts exhibit a higher preference towards
higher salary and bonuses and are less willing to
sacrifice their current income (salary and bonuses)
for a higher retirement income. The younger
respondents also have a lower preference
for medical insurance compared to the
50+ age group.
“There
“
is a significant difference between GCC expatriates
and nationals, with expatriates preferring a lower income in
retirement for larger bonuses and pay increases.”
16 towerswatson.com
Conclusion
Amid continuing global economic uncertainty, there is a surprisingly low level of savings in MENA.
This defies the illusion that employees in the region save a significant proportion of their income.
Although expatriates exhibit a higher level of savings than nationals, there is still a substantial
proportion that save less than 10% of their income. This warrants a closer look at the savings
patterns of the different expatriate groups by country or region of origin, since there is previous
evidence that cultural effects considerably influence savings rates7.
Employees’ savings motivation in the region tend to focus primarily on housing needs and
precautionary savings. It is concerning to see that saving for retirement ranked low amongst
respondents, especially given that many are uncertain whether they will be able to maintain their
current standard of living in retirement. It is, however, encouraging to find that many employees
would be willing to sacrifice higher pay increases and bonuses today in order to ensure a higher
income in retirement. Given these findings, employers in the region should begin to review their
employee value proposition and total rewards offering in order to gain a competitive advantage and
attract and retain key talent.
7 S
ee Al-Awad Elhiraika (2003)
References
Rocha, R., Arvai, Z., Farazi, S. (2011). “Financial Access and Stability:
A Road Map for the Middle East and North Africa”. © World Bank.
https://openknowledge.worldbank.org/handle/10986/2360
Robalino, D. (2005), “Pensions in the Middle East and North Africa:
Time for Change”. Washington DC: The World Bank.
DeMarco, G. (2011), “Retirement Savings in MENA”. World
Bank, Washington DC. http://siteresources.worldbank.org/
INTMNAREGTOPPOVRED/Resources/MENAFlagshipPensions3_10_11.pdf
Mouawiya Al-Awad & Adam Elhiraika, (2003). “Cultural Effects and
Savings: Evidence from Immigrants to the United Arab Emirates,” The
Journal of Development Studies, Taylor and Francis Journals, vol. 39(5),
pages 139-151.
Savings and retirement attitudes survey – Middle East and North Africa 17
About the survey
The Towers Watson Middle East and North Africa
savings and retirement attitudes survey includes
responses from 2,624 employees, working
for organisations of 100 or more employees
across the Middle East and North Africa region.
The survey examines employees’ savings
behaviour and retirement readiness as well as
their preferences towards employment rewards
and benefits.
All respondents
Employment status
 56%
 44%
GCC respondents
Full-time
Part-time
Age
 33% National
 67% Expatriate
Gender
 87%
 13%
18 towerswatson.com
 96%
 4%
National
Expatriate
Male
Female
 33%
 44%
 18%
 5%
 1%
20–29
30–39
40–49
50–59
60+
Savings and retirement attitudes survey – Middle East and North Africa 19
About Towers Watson
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through effective people, risk and financial management.
With 14,000 associates around the world, we offer
solutions in the areas of employee benefits, talent
management, rewards, and risk and capital management.
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Copyright © 2013 Towers Watson. All rights reserved.
TW-EU-2012-29027. January 2013.
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