The UAE has taken major steps forward in reshaping its retirement system. The changes to its pension scheme run right across the board, from graduated contributions for Emiratis to voluntary savings schemes for the country’s many expatriates.
Having served as the UK’s pensions minister for more than five years, I saw first hand the transformative power of pension reform when underpinned by innovative policy and technological innovation.
The UK’s auto-enrolment programme, launched in 2012, is now one of Europe’s most successful public-private financial collaborations, with more than 10 million additional people saving for retirement as a result.
Crucially, it proved especially effective in reaching younger workers who might otherwise have delayed long-term saving altogether.
Giving people a visible, growing stake in their future helps build long term engagement and a sense of belonging.
That success was no accident – it was the result of clear long term vision, an inclusive approach and the effective use of modern financial technology.
In the UAE, a similarly structured system could support efforts to attract and retain younger professionals, offering them not just a job but a more tangible connection to the country’s future.
Introducing a new system for expatriate employees and replacing the traditional end-of-service gratuity with a savings and investment-based scheme signals a shift toward a more sustainable and globally competitive model.
The process places strain on smaller employers, who may struggle to meet lump sum obligations
While some employers have yet to move away from legacy gratuity practices due to familiarity, limited regulatory urgency and uncertainty, the direction of travel is clear: a forward-funded model powered by technology with real-time visibility, stronger governance and simpler administration will make adoption both attractive and achievable.
The current process places undue strain on smaller employers, who may struggle to meet lump sum obligations. Without forward-funded contributions, SMEs are forced to earmark large lump sums to cover these costs, affecting future planning.
In contrast, the new proposals pave the way for a more secure approach.
Employers and employees will contribute to regulated investment funds, making retirement savings both portable and professionally managed. This can level the playing field for SMEs and their employees, who are often key drivers of future innovation and economic diversification.
Reform of this scale requires thoughtful implementation. But the UAE’s position as a growing financial and technological hub makes it ideally placed to leapfrog legacy challenges that many Western pension systems continue to grapple with.
Technology will be critical. For most savers, what matters most are simplicity and transparency. Being able to check their balance in real time, understand how their money is being invested and adjust contributions accordingly are all hallmarks of a system designed with savers at its heart.
A well-designed digital system offers that kind of visibility, through intuitive apps or digital dashboards, making savers’ lives easier.
For employers, especially small businesses, technology can take the complexity out of pensions. Automated systems can handle contributions, reduce administrative burdens and ensure compliance without needing a team of specialists.
And for regulators, digital platforms provide much-needed oversight, ensuring that standards are met and protections are in place.
The result is a system that works better for everyone, building trust and encouraging long-term saving.
Ultimately, this is about more than financial returns. It’s about providing people with security and dignity in later life. If the UAE can create a fair, efficient, tech-enabled system, it will not just improve lives – it will offer a model for others to follow.
The UAE is uniquely placed to lead on pension innovation. With a young, mobile population and a forward-thinking approach to regulation, it can set a regional, and indeed global, standard.
It’s rare to have the chance to design a pensions system with a clean slate. That opportunity should not be underestimated.
Guy Opperman is former UK pensions minister and senior adviser to Smart Pension
