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Can UAE residents boost their savings with a ‘second salary’ every month?

National Bonds is offering customised savings solutions to generate a supplementary income.

Can UAE residents boost their savings with a ‘second salary’ every month?
[Source photo: Anvita Gupta/Fast Company Middle East]

Whether traveling or spending more time with family and friends, everyone has their version of their retirement. 

Here’s a surprising fact: according to a 2022 survey, in the UAE, 63% planned to retire before they reached 60. However, 45% said they hadn’t started saving for retirement. 

As part of the latest effort to offer financial security in the UAE, Sharia-compliant savings and investment company National Bonds is introducing a new customized savings solution to generate a supplementary income. 

Open to Emirati nationals and UAE expats, the initiative is set to significantly improve retirement plans in the country. And if you utilize it just right, you could make a 50% increase in your savings.  

The program consists of a saving phase, wherein customers deposit into National Bonds every month for three and ten years, and an income phase, enabling customers to receive a monthly income. During the second phase, customers will receive their monthly base investment amount plus their accumulated profit. 

According to National Bonds, the profit earned will be compounded monthly to provide enhanced returns. To be eligible, customers must place a minimum investment of $272 for three years. Customers also opt to redeem their savings as a lump sum instead of a monthly payment if they have specific financial goals, such as payment of school tuition fees, a down payment for a house, or investment purposes. 

Talking about the scheme, National Bonds Group CEO Mohammed Qasim Al Ali encourages UAE residents to avail of the plan to secure financial stability. “During economic uncertainty globally, especially after Covid-19, financial stability and retirement planning have become a major concern for residents more than ever, and this plan constitutes one of the tools that contribute to the residents’ future planning,” he says.

Under the scheme, for example, if customers save $1,382 monthly, they can expect to withdraw $2,042 for the subsequent ten years. Likewise, if customers save $1,361 (AED5,000) per month for five years and withdraw their money within three years, they can take home $2,728 for three years — doubling their monthly savings. 

With most people delaying their retirement planning, often due to a lack of clarity on how to begin, Vijay Valecha, Chief Investment Officer, Century Financial, commends the scheme as a simple, straightforward, and flexible solution. “Sometimes people prioritize immediate financial needs such as paying off a mortgage, student loans or saving for their children’s education.” He continues, “People lose sight of a long-term financial security plan in these situations. The ‘Second Salary plan’ gives people a systematic approach to their retirement planning by investing in small amounts regularly.”

While the initiative presents new opportunities, some can still be wary of its stability. To this, Al Ali also assures UAE residents that they provide affordable and flexible saving plans with capital growth competitive returns, contrary to other offers in the market that are rigid and non-breakable plans. 

“This plan ensures that it provides enough cushion at the time of retirement to support the current lifestyle,” he says. “It also contributes to supporting the future financial stability of residents, whether in terms of their retirement or other plans like financial health, schools or universities for their families.”

In March last year, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, also launched a savings retirement scheme for non-Emirati nationals working in Dubai’s government and public sector. Following that, last October, National Bonds launched a Golden Pension Scheme to help expat employees in the private sector through returns offered by the entity.

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