The document discusses retirement planning and savings schemes. It notes that retirement is no longer a predefined age but a flexible period requiring financial planning. People are living longer so retirement savings must be optimized through saving more and working longer. Several myths about retirement are addressed, such as the notion it means ending work, and flexibility is positioned as the new model of retirement. The importance of adequate retirement planning through private savings schemes is emphasized. Reforms are needed to encourage corporate savings plans which benefit both employees and employers.

1. Interactive Symposium on "Corporate Savings & Retirement
Schemes”
Successful Financial Planning for
Retirement
Sohail Jaffer

2. Hard realities of the game of Cricket – An Analogy w.r.t. Insurance
An uncertain Retired Hurt
2014 … a year that shocked everyone
An inevitable Retirement
Lack of adequate protection endangers life …
2

3. Source: Metlife
No longer an automatic one-off event that
occurs at a pre-set age – 60 (women)/65
(men)
People are happy to keep working not just
because their pensions have fallen short of
expectations but also because they would miss
the social interaction at workFinancial planning to encompass both
saving more & working longer, to optimise
the use of both financial and human capital
People are living longer and are healthier, but
often leave the labour force just because they
reach a ‘standard’ pension age. This is a waste of
resourcesPlanning could ease financial burden &
enhance later life lifestyles
3

4. Source: Merrill Lynch (Bank of America Corporation)
What is driving the change ?
Increasing life expectancy, which has produced a
retirement that can last 20 years or more
Elimination of pensions for most workers, shifting
burden for funding retirement from employers to
retirees
Recent economic uncertainty, which has been a
wake-up call for many people that it is not financially
sustainable to retire without some employment
income
Re-visioning of later life, new generations seek
greater purpose, stimulation, social engagement &
fulfillment in retirement.
Myth 1: Retirement means the end of work.
Reality: Over 7 in 10 pre-retirees want to work
in retirement. In the near future, it will be
increasingly unusual for retirees not to work.
Myth 2: Retirement is a time of decline.
Reality: New generation of working retirees is
pioneering a more engaged & active retirement
- the New Retirement Workscape - which is
comprised of 4 different phases:
(1) Pre-Retirement (2) Career Intermission
(3) Reengagement (4) Leisure
Myth 3: People primarily work in retirement
because they need money.
Reality: 4 types of working retirees:
(1) Driven Achievers (2) Caring Contributors
(3) Life Balancers (4) Earnest Earners
Myth 4: New career ambitions are for young people.
Reality: Nearly 3 out of 5 retirees launch into a new line of work, & working retirees are 3 times more
likely than pre-retirees to be entrepreneurs
4

5. Source: Nielsen & Aegon
Recessionary sentiment improved for most in
2014 - Global discretionary spending/saving
intentions were either flat or declined slightly
in 4Q14.
1-in-10 plan to save for retirement (10%).
MENA – For 4Q14, Q-on-Q discretionary spending
intentions increased 1% points to 6% for those planning
to save for retirement.
The economic outlook revives, but concerns about future
retirement remain
There is a strong need to undertake financial planning
The solution lies in making retirement planning easier
Flexibility will become the new model of retirement
The emotional
values people
associate with
retirement -
Leisure 46%
Freedom 41%
Enjoyment 29%
Insecurity 22%
People aspire to have an active
retirement which blends travel,
family, hobbies and work -
Travel 62%
Family & Friends 59 %
New Hobbies 49%
Volunteer Work 25%
Continue Working 15%
Live Abroad 13%
Start a Business 12%
Study 12%
Global retirement readiness
rebounds in 2014 (5.8) > 2013
(4.9) 5

6. Most Australians don’t have enough money to retire on.
Industry must be able to help retirees by providing products which generate a regular & stable income
stream, provide longevity risk management & which are flexible enough to deal with unexpected life
events.
This will help prevent retirees over spending, and running out of income earlier than expected, or
conversely under spending & leading an unnecessarily frugal life.
Key Message
…
Case Study
– Australia
Source: The Association of Superannuation Funds of Australia (ASFA) & State Street Global Advisors (SSgA)
The Standard incorporates expenditure on:
o Communications
o Private health insurance
o Energy
o Clothing
o Household goods and services
o Recreation
o Transport
Portfolio diversification & a greater allocation to growth assets are likely to help retirees make their
superannuation last longer, at a time when Australians are living longer than ever before.
6

7. Source: Natixis Global Asset Management CoreData Global Retirement Index (GRI)
Good economic
performance backed by
high quality of life gives
retirees in UAE a leg up
compared to other nations
UAE tops ranking in old
age dependency ratio &
inflation indicators,
suggesting that it wouldn’t
face same demographic
challenges as many other
developed nations
will, in the foreseeable
futureUAE climbs one place in
the rankings & continues to
enjoy a spot in top 30
countries for retirement in
2015.
2015 Natixis Global Asset Management CoreData Global Retirement
Index (GRI)
7

8. Source: HSBC, The Future of Retirement, UAE Report, 2014
“27% of pre-retirees
surveyed say they
cannot afford to retire”
12 years - On
average, how long
pre-retirees expect
their retirement
saving & investments
(excluding pensions)
to last in retirement
16 years - Typical
retirement life
expectancy in UAE.
(based on full
retirement at age 60 &
average life expectancy
of 76 years)
HSBC - 2014 The Future of Retirement Survey
On average, retirees in
the UAE face a 4 year
retirement funding gap
46% of pre-retirees are not currently, or do not
intend to start, saving specifically for retirement
76% of pre-retirees are concerned about not
having enough money to live comfortably in
retirement
For 87% of working age people, saving for
retirement is not their main priority
55% of pre-retirees who are not adequately
preparing for a comfortable retirement admit they
did not start savings early enough
Family and Starting a business are the
most
important retirement aspirations
Financial hardship and poor health are the biggest
retirement fears
15 vs. 9: People expect to spend 15 years in
retirement, but their savings to run out after 9
years
8

9. Expats currently living in the Middle East are
more likely to consider moving away for
retirement reasons than their counterparts in
Europe and Asia.
Retired expats are more likely to be first time
expats (63% compared with the global expat
average of 53%), rather than serial expats -
perhaps indicating that they’re unafraid of
new challenges & big changes.
Source: HSBC
How expats are saving for retirement
globally:
Retired expats are making sure they’re spending their
retirement exactly how they want.
United Arab Emirates (UAE) emerges as one of the
costlier expat destinations, with more than half saying
that they would choose to leave because it is too
expensive (60%) or for retirement (23%).
9

10. Source: Source: Manjoo, (2012), An Appraisal of Longevity Risk: Conventional and Islamic Perspectives., Kuala Lumpur: ISRA, Booz & Company Analysis
Three Pillars of Retirement Planning
Three-Pillar System
State Pension
(Social
Security
Schemes)
Occupational
Pension
Private
Savings
Secures a
minimum
standard of
living
Maintains
employee’s
current standard
of living
Covers
additional needs
Financed with
employer and/or
employee
contributions
Financed with
personal
savings
Privately
managed
Financed with
(payroll) tax
Publicly
managed
Privately
managed
Pillar 1: State Pension (Social Security Schemes)
Only cover nationals - Social security
schemes in the Gulf Cooperation Council
(GCC) cover nationals & are very generous
defined benefit arrangements
Replacement ratio of 80%
Most national employees retire by age 60 with their
social security schemes paying 80% of what they were
earning prior to retirement
Young population demographics
Median age in twenties but it will increase in near future
due to increases in life expectancy and decreases in
fertility rates
Huge drop in old-age support ratio by 2050
Ratio of contributing workers to retirees is expected to
drop from the current level of 25:1 to approximately 3:1
by 2050
Current partially funded schemes are unsustainable and
governments are introducing reforms albeit at a slower
pace
10

11. Pillar 2: Occupational Pension (Gratuity) in
GCC
US$ 5 billion
Value of unfunded end of service gratuity
payments in the UAE (estimated by Milliman)
67% of corporates
Expect an annual increase in their total
salary expense of over 5% over the next 3
years
Findings of a recent employer survey on End
of Service Gratuity
What do you do with
ESG* funds?
Interest in
establishing a trust
for ESG* funds
54%
24%
22%
Part of working
capital
Don't know
Invested
36%
8%
56%
Yes
Already
established
Not under
consideration
Only 8% of corporates have implemented an
End of Service Gratuity (ESG) funding
mechanism
Corporate Savings Plan –
Value Proposition for Corporates
End of
Service
Gratuity
funding
The Plan provides a
mechanism for employers to
fund end of service gratuity
(ESG)*
Competitive
Group Benefit
Program
Corporates can provide employees a
cheaper way to access retirement
planning, by offering the Plan to employees
Enhance
Employee
Retention
Corporates can reduce cost of recruiting &
training new employees
Source: SEI: Employment trends & managing End of Service Benefits in the Middle East * Employers are required to pay ESG to employees under UAE labour
54% of corporates have or are interested in separating
assets in order to protect and ear-mark assets to fund ESG
• Good employee benefits attract and retain talented staff
• Happier employees, with peace of mind, are more
productive
35% - HR decision makers list employee retention as top
objective
• Vesting scales support employee retention
11

12. Corporate Savings Plan –
Benefits for Employees
Disciplined
Retirement
planning
Access to disciplined retirement
planning through payroll
deductions
Regular savings (percentage of
salary)Institutional
investment funds
Gain access to institutional
investment platform
Minimize
leakage
The Corporate Savings Plan
provides a cost effective way for
employees to access retirement
planning0%
external
Investment
Fund
Placement Fee
Benefit from 0% external
investment fund placement fee. No
entry or exit fees charged on
underlying investment funds (no
bid-offer spread)
Segregated
Assets
Asset held by an off-shore trust or
reputed custodian
Corporate Savings Plan –
Risks in Corporate Savings Plans
Employees decide the investment
strategy for their contributions
Employee
contributio
n plan
As this is a defined contribution plan,
employees can decide whether they
wish to make contributions.
Employee
selects
investme
nt
strategy
Each individual employee selects the
investment strategy for their voluntary
contributions.
Investme
nt values
fluctuate
Investments fluctuate in value. Each
investment strategy has a different risk
/ return profile. There is no investment
return guarantee on invested
contributions and the actual return will
depend on the future performance of
the employee’s investment strategy.
Employee
s bear
risk /
reward of
their
strategy
As this is a defined contribution plan,
employees can decide whether they
wish to make contributions.
Effective employee communication strategy is required
to mitigate the above-mentioned risks 12

13. Corporate Savings Plan –
Digital Applications
Hassle-free - Enrolment &
Administration
Efficient Enrolment
Efficient Plan
Administration
Automated
calculation of Benefit
payments
Contribution &
Investment record
keeping
Customer-
centric
business
model
What does it mean to be digital?
Digitization is not just about enrolment &
administration through electronic
channels; it has the potential to transform
operational processes, reducing HR time
& cost associated with running an
employee savings plan
Hassle-free set-
up
Streamlined
digital system for
enrolment and
administration
Separate tracking
of each of the 3
contribution
streams
Funds ear-
marked by
member
employees
Transparent fee
structures and full
disclosure
Continuous
support
13

14. The Way Forward –
Reforms Needed to Encourage Private Corporate Savings Schemes
In addition to the employees’ retirement goals, private corporate savings schemes would help
achieve the economic and financial goals of the region by contributing to the development of
the region’s capital markets and improving the efficiency of labor markets
The current social security schemes are unsustainable and reforms would be needed to
encourage private corporate savings schemes
Proliferation of Corporate Savings Plans in GCC will enhance employee well being, talent
retention and augment employee productivity
14

15. Retirement is a journey not a
destination
Abraham Lincoln
Words of the wise – worth
remembering
15

16. Thank You
Sohail Jaffer
Managing Director
Business Development Insurance Services
Capita Middle East
DIFC, PO Box 49983,
Dubai, UAE
Mobile: +97150 429 6876
Email: sohail.jaffer@capita.co.uk
The information in this presentation does not constitute a sales offer, investment advice or an offer for the acquisition of financial products,
and shall not in this regard imply obligations for the entity or anybody else towards the readers of the presentation.
This presentation is solely intended to provide information on matters of interest for the readers and as such information is not meant to
replace the knowledge and the judgment of the readers who should make all appropriate inquiries.