National Bonds calls on public and private sectors to assist in boosting savings awareness efforts

The country's leading Shariah-compliant savings scheme urged companies and authorities across the country to play a bigger part in increasing the financial awareness of the UAE population after research revealed that 87% of UAE residents do not believe that their current savings are adequate for the future.

The findings of the National Bonds UAE Savings Index, now in its third year, also revealed that just 1% of UAE residents would class their savings as 'more than enough' for their future.

The National Bonds Savings Index is an annual comprehensive study of the behavior and attitudes of people in the UAE towards saving and spending money.

The initiative was launched in 2010 by National Bonds Corporation PJSC to provide a reference point for the development of savings patterns and habits among the general public, and to better understand the reasons for these habits.

While this year's findings showed a slight positive increase in overall savings sentiments over last year, there was a clear shift in priorities across all sects of the population. Saving for retirement replaced saving for children's education as the number one reason for saving in the country, highlighting an increasing trend in the UAE of residents starting to look further beyond the immediate future with their savings plans.

The top three priorities were: saving for retirement, children's education and purchase of property for personal use, and these were consistent across Emiratis, Arab expats, Asian expats and Western expats. While saving for weddings was a high priority for Emiratis just two years ago, it is now the tenth priority on their list, falling behind expenses such as purchase of a car and house renovation.

Positive Changes
The results of the Index did, however, demonstrate that people have begun to take the right steps towards securing their financial future.

There was a 7% drop amongst people who said that they saved much less than what they planned over the past year, meaning that people are gradually learning to stick to their savings plans.

In addition, there is a movement towards wiser spending, as fewer people claim to be spending a lot on transportation and household/utility items, both generally considered expenses that are flexible to 'cutting back', and rather attribute their spending to fixed costs such as children's education and rents.

Mr. Mohammed Qasim Al Ali, Chief Executive Officer at National Bonds Corporation PJSC, believes, there are many positives to take from these findings. He said, "While this year's Index indicates that there is still a long way to go, it has demonstrated to us that we are predicting trends correctly in our efforts here at National Bonds to support people with the right tools to make them regular savers. For example, we launched our Employee Savings Scheme last year as a solution for working professionals looking for their own private savings plan, and now we can see that saving for retirement has become the number one priority for savings across the country."

He added, "Of the respondents who aren't currently taking advice from financial advisers, more than half said that they would like to get that type of advice if they could. We pre-empted this request by launching our ongoing National Bonds Financial Education Roadshow earlier this year, providing financial advice to different sects of the community in both English and Arabic languages."

"When given an option for savings, 50% said they would prefer payroll deduction or direct debit from their bank accounts. Again, National Bonds has already launched both of these services for customers with the Employee Savings Scheme and the Standing Instruction Order, respectively. These examples show that National Bonds is the forerunner in not only predicting trends but providing the right savings tools to suit people's needs," he added.

The Index amalgamates responses in three key areas (respondent's perception of their savings potential, the savings environment around them and their own financial stability in the near future) into base values that can be used as a frame of reference to measure changes in savings sentiments.

The 2012 National Bonds Savings Index shows a small positive increase across all component scores in the UAE over last year. On an individual Emirate level, there was an increase in positive savings sentiments across all emirates except Dubai and Abu Dhabi.

Fluctuating Sentiments
Sentiments for the savings potential of Emiratis, Arab expats and Asian expats all dropped over last year, but Western expats' sentiments increased significantly.

Western expats also had the highest sentiments regarding the savings environment, with 41% believing it is a good time to save, followed by Asian expats (31%) and Arab expats (29%). There was also an overall increased optimism towards job stability, as 85% of respondents believe that their financial status will remain stable or improve in the next 6 months, while 92% believe that their income will remain stable or increase over the next 6 months.

When asked about the drivers of choice for savings instruments, the top three factors respondents chose were attractive returns, Shariah compliance and the strong reputation of the provider. The top three priorities are a strong endorsement for National Bonds, which is the only Shariah-compliant retail bond of its type in the region. It has provided cumulative returns of 30.33% over the past 6 years, consistently higher than the market average for similar savings vehicles.

National Bonds, which counts over 670,000 people as its customers, has been vocal in its commitment to encourage a saving culture in the UAE since its inception. The company has launched a variety of different products targeting employees, employers, even savers using dollars as their currency rather than dirhams.

In its bid to become a one-stop provider of savings solutions to people across the region, it has offered various incentives and prizes and launched a diverse range of Financial Family Protection Plans, covering children's education, females, and even housemaids, in addition to a financial education roadshow going across the country targeting different segments of the community.

Mr. Al-Ali added, "National Bonds has not only successfully raised awareness about the widespread apathy towards savings and highlighted the importance of addressing it, but we are also educating the community about the appropriate financial tools to use. In order to now get our message to the widest possible audience, it is important to get the support of public and private institutions through their encouragement for initiatives such as the Employee Savings Scheme or their involvement in our financial education road shows. We have laid the foundations so that others can join us in building on them."

He also spoke about the key role of the media in encouraging a savings culture, saying, "The media have played a huge role in helping us transmit our message to the public, by showing interest in the savings conversation and covering stories related to it. Their role will be even bigger in the coming year in order to educate the public further about the importance of savings, so we look forward to their support in the next chapter of our endeavors."

The 2012 National Bonds Savings Index was commissioned by National Bonds Corporation PJSC and conducted in April and May 2012 by YouGov using an online interviewing mechanism, and was carried out in Arabic/English languages across a sample of 611 respondents in the UAE.

Respondents were screened for age, income and bank usage for personal banking needs. The final sample split by nationality is as follows: UAE Nationals (14%); Arab expatriates (30%), Asian expatriates (46%) and Westerners (9%).