(MENAFN- Khaleej Times) For 39 per cent of bonus recipients the primary use of their payment will be to settle debt with a further 16 per cent using the bonus to pay bills such as rent or school fees.
Dubai: Those lucky enough to receive a company bonus may get excited at the prospect of a bumper pay packet during the “bonus season” in March and April but the reality is that the majority of people in the UAE are using this extra cash to settle debt or pay bills.
According to a survey for Zurich International Life by YouGov 71 per cent of UAE residents will receive a company bonus during 2015. However for 39 per cent of bonus recipients the primary use of their payment will be to settle debt with a further 16 per cent using the bonus to pay bills such as rent or school fees.
Another 13 per cent of respondents said they will leave their bonus in the bank 11 per cent will invest in property and 10 per cent will invest in a savings scheme while only seven per cent will spend the majority of their bonus.
The survey of 1000 UAE residents also found Arab expats are the most likely to use their bonus to settle debt (45 per cent) or pay bills (19 per cent) with Western expats the least likely to settle debt (32 per cent) or pay bills (nine per cent). Emiratis are the most likely to spend their bonus (15 per cent) while Indian expats are the most likely to invest it in a savings scheme (16 per cent).
“The tendency to live a lavish lifestyle in the UAE means many residents need their bonus to pay off financial liabilities. This leads to a greater strain on their long-term savings” said Paul Dawson head of retail distribution at Zurich International Life.
“Many expats look forward to tax-free bonuses when they move to the UAE with the intention to save and secure their financial future. They probably don’t expect needing to use their bonus to clear debt accumulated during their stay.”
He added: “Another concerning trend is the number of people leaving their bonus in the bank. With UAE inflation running at four per cent and low bank deposit interest rates the net effect of this investment strategy could be a loss in real terms. Try to maximise the returns from your hard-earned bonus.” Zurich’s survey also asked expat respondents for the main reason they moved to the UAE. It found 44 per cent of expats relocated to earn more money and a tax-free salary; 20 per cent came for career progression; and another 20 per cent for family reasons in most cases to stay with their spouse.
Only 11 per cent relocated to the UAE for its lifestyle and safe environment.
Despite money being a motivating factor for moving to the UAE Zurich’s survey found that only 44 per cent of expats believe they will fulfil their financial goals when they leave the country. In fact 26 per cent of expats do not set any financial goals for the duration of their stay.
“The majority of expats move to the UAE for better earning potential through increased salary tax free income and career progression opportunities” said Dawson.
Zurich’s survey also found the majority of company bonuses (81 per cent) equated to one month’s salary or less; while a lucky seven per cent received a bonus worth three times or more their monthly salary. For 45 per cent of respondents the bonus in 2015 is higher than the payment in 2014 while 30 per cent are receiving a lower bonus this year than previous.
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