Citizens almost everywhere in East Asia are highly concerned about their retirement security, and are eager to improve their retirement preparedness, according to findings from a study on retirement attitudes and expectations in the region, conducted by the Global Aging Institute (GAI), in partnership with Prudential Corporation Asia. What is also striking is the rejection of the family as the main financial source of support in retirement, representing an "almost tectonic shift" in attitude and expectations, said GAI Founder and President Dr Richard Jackson.
The study, titled “From Challenge to Opportunity: Wave 2 of the East Asia Retirement Survey”, revealed that an overwhelming majority of respondents in every market rejected the traditional expectation that the family should be primarily responsible for providing for the elderly. However, different markets have different views about who should take the place of the family in guaranteeing retirement security.
In South Korea, Singapore, Hong Kong and Taiwan, a majority of respondents felt that retirees themselves should be responsible for their own retirement income whilst in Malaysia, Indonesia, Vietnam, China, the Philippines and Thailand, a majority felt that the government should assume the primary role in retirement security.
Although the family’s role in retirement security has diminished over the years, most respondents want to see it shrink even further. But a lack of viable alternatives to close the retirement security gap is cause for concern. “The findings show that retirees in East Asia find themselves at a difficult juncture. Traditional family support networks have been weakening, yet adequate government and market substitutes have not yet been put in place,” said Dr Jackson.
The result, he said, is thus growing economic vulnerability. The retirement outlook for today’s workers is brighter in most markets, but still highly uncertain. Across East Asia, workers are very anxious about their retirement prospects, and are also eager to improve them, Dr Jackson added.
Strategic steps to narrow retirement gap
The enormous challenge facing East Asia’s aging populations also presents an enormous opportunity to build more adequate and sustainable retirement systems. As such, there is a critical role for both governments and the financial services industry to play. The survey suggested eight strategic steps for policymakers and financials service providers which include:
Implications for government policymakers
- Improving the adequacy of state pension systems
- Encouraging or requiring workers to save more for their own retirement
- Establishing more robust floors of old-age poverty protection
- Raising retirement ages and encouraging longer work lives
Implications for financial service providers
- Educating the public about the critical role of the financial services industry in retirement savings
- Helping today’s workers turn their retirement savings aspirations into realities
- Designing and marketing financial products and services for workers who want to assume responsibility for their own retirement security
- Satisfying the widespread public demand for financial products that convert household savings and lump-sum pension payments into retirement income streams
Mr Donald Kanak, Chairman of Prudential Corporation Asia said: “Rapid aging is Asia is an irreversible trend and poses many challenges for today’s societies. Closing the growing gap in old-age protection requires public and private sector solutions. The insurance and asset management sectors can play a critical role that relieves pressure on government budgets as societies age.”
More information on the survey may be found at gap.globalaginginstitute.org and www.prudentialcorporation-asia.com/eastasia-retirement-2015/.