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A quick Google search about UAE pension fund directs me to an official government sight about UAE pension fund. I'm confused why you say UAE doesn't have one? I could even find, that UAE changed from lump sum pension to a more western style pension.
Anyway, back to your question. In the Bismarck era, the Chancellor of Germany introduced the idea of universal pensions in order to combat political unrest. This way people don't need to be afraid of going broke if unforeseen circumstances happen. It is also a good alternative security for future. Back then, your only future policy where your kids - pensions created a new upportunity.
The general population is on average risk averse, meaning people are willing to pay in order to minimise risk. This is why insurances are popular. Now, take a risk averse population and grant them something that reduces their future risk. Obviously they will take it.
Which truly leads to why this exist - people are willing to pay money to have a guarantee for future. It's incredibly hard to decrease pensions in any way, because the voters will vote out anyone who tries.
Mathematically speaking, the pension models (OLG-diamomd models) predict that in absence of government pension, everyone will indeed do as you say and invest properly. This however is not how the real world works. Many people have no interest or idea how to invest, and end up mismanaging their funds. And even those who do may end up loosing all their life's saving because of an accident.
Couple this with the fact that people generally prefer to spend now rather than save, and you have a recipe for many broke people. And broke people do crime, no matter their age. Not all, but they definitely have more reason too than others. Pensions prevent this crime problem. Social problems aren't 'your' problems, they are everyone's problems!
To recap:
1. Pensions are an insurance for future
2. Strong voter preference for pensions
3. Stops potential social problems
Now to the question in title, does the government benefit from giving us pensions? The whole system is somewhat expensive, so that must be case, else more countries would get rid of it by now. Aside from the previously mentioned, actually paying out pensions grants an increase in consumption. People spending money is what drives a modern economy. If say, 15% are old and broke, then that's 15% less consumers meaning smaller demand and ultimately less income. By keeping everyone buying, you keep the economy going, and your pockets full.
There's nothing here!