Recession puts the brakes on saving for retirement: Survey
Updated: 2009-07-08 07:17
By Joey Kwok(HK Edition)
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HONG KONG: Almost 90 percent of people in Hong Kong do not feel well prepared for their retirement, as the current economic downturn is forcing them to cover immediate financial obligations instead of saving for the future, an HSBC retirement survey revealed yesterday.
Around 84 percent of the respondents in Hong Kong also said the mandatory provident fund (MPF) is not adequate to provide security in their old age, the survey showed.
David Fried, group general manager and regional head for insurance Asia-Pacific at HSBC, said the present climate of economic uncertainty has led people to re-evaluate their preparedness for retirement.
"Hong Kong people are more prudent about how they manage the hard-earned wealth they have accumulated over the years. Realizing that their retirement savings may not be sufficient, they are now planning to either save their cash or re-invest the money into products that can help stretch their retirement nest egg," Fried said in Hong Kong yesterday.
Nearly 60 percent of Hong Kong respondents in the survey said they will save cash when they get their retirement funds, while 24 percent said they intend to buy an income retirement product and 22 percent prefer to buy insurance or property.
In contrast, less than one-third of them said they will use their retirement savings to go on a holiday.
When asked how the economic downturn will take a toll on their retirement plans, 12 percent said they intend to delay their retirement, while 21 percent will see how long the recession lasts before they can assess the impact on their future plans.
"The economic recession has eroded the value of people's wealth and savings, while forcing people to delay retirement to earn back the financial security they aspire for," said Jason Sadler, HSBC Insurance managing director for insurance business Hong Kong.
Sadler also said people in Hong Kong have been more risk-reserved over the past 18 months, with more individuals preferring to hold cash to avoid investment losses.
"We have seen more people in Hong Kong moving away from investment-linked products to traditional products in the first quarter," Sadler said. "People are still very cautious at the moment."
He expects the insurance market may offer more low-risk retirement products in the near term, as customers gradually move to simple and affordable financial solutions that provide liquidity and some level of capital protection.
The survey questioned 15,000 people aged between 30 and 70 years in 15 countries and territories around the world, including 1,000 respondents in Hong Kong.
(HK Edition 07/08/2009 page4)