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The Future of Retirement in Emerging East Asia by Dr Richard Jackson, CSIS
 

The Future of Retirement in Emerging East Asia by Dr Richard Jackson, CSIS

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CSIS conducted a survey of retirement behavior and expectations in China, Hong Kong, Malaysia, Singapore, South Korea, and Taiwan. These slides offer a summary of Dr Jackson's research, presented at ...

CSIS conducted a survey of retirement behavior and expectations in China, Hong Kong, Malaysia, Singapore, South Korea, and Taiwan. These slides offer a summary of Dr Jackson's research, presented at Asia House on 14 March at a private roundtable meeting on approaches to welfare in Asia and the UK in association with Reform and Prudential plc.

This research was sponsored by Prudential plc.

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    The Future of Retirement in Emerging East Asia by Dr Richard Jackson, CSIS The Future of Retirement in Emerging East Asia by Dr Richard Jackson, CSIS Presentation Transcript

    • The Future of Retirement in Emerging East Asia Survey Evidence from Six Countries Richard JacksonCenter for Strategic and International Studies Roundtable Seminar Asia and the UK: Approaches to Welfare Asia House, London March 14, 2013 GAPINDEX.CSIS.ORG/ASIA
    • CSIS East Asia Retirement Survey CSIS conducted a survey of retirement behavior and expectations in China, Hong Kong, Malaysia, Singapore, South Korea, and Taiwan. The survey was based on nationally representative samples except in China, where the sample was limited to urban residents. The survey universe consists of “main earners” aged 20 and over and includes both current main earners and retired main earners. Respondents were asked about their general attitudes toward retirement, as well as about their own retirement experience and expectations. Current retirees were asked about their current retirement experience, while current workers were asked about their expectations for retirement. 2
    • Attitudes toward Retirement 3
    • Only small minorities believe that the extended familyshould have responsibility for retirement income. "Who, ideally, should be mostly responsible for providing income to retirees?“ Share of Respondents Saying “Grown Children or Other Family Members.” China 4% South 5% Korea Taiwan 7% Hong Kong 12% Malaysia 14% Singapore 22% 0% 5% 10% 15% 20% 25% 4
    • Declining family size may be one reason for low supportfor family responsibility for retirement income. Share of Respondents Aged 20-39 Who Neither Have Nor Expect to Have Children China 8% Malaysia 20% Singapore 26% Taiwan 28% South Korea 31% Hong Kong 48% 0% 10% 20% 30% 40% 50% 5
    • More individualistic “western” values are also beginningto compete with traditional “Asian” values. Share of Respondents Saying Both Parents and Children Would Be Happier If They Were More Independent and Self-Sufficient Singapore 20% Malaysia 30% Hong Kong 30% China 36% South Korea 52% Taiwan 56% 0% 10% 20% 30% 40% 50% 60% 6
    • In most countries, there is strong support for individualsavings-based responsibility for retirement income. "Who, ideally, should be mostly responsible for providing income to retirees?" Share of Respondents Saying "Retirees Themselves, through Their Own Savings" versus Share Saying "Government" or "Grown Children of Retirees or Other Family Members" 70% Retirees Themselves 63% Government 60% 53% Grown Children or Other Family Members 50% 45% 40% 40% 39% 40% 37% 36% 31% 32% 31% 30% 22% 20% 14% 12% 9% 10% 7% 5% 4% 0% South Korea Taiwan Hong Kong Singapore Malaysia China 7
    • When asked to choose between individual and familyresponsibility, respondents favor individual responsibility."If retirees do not receive any income from government or formeremployers, who, ideally, should be mostly responsible for providing them with income?"Share of Respondents Saying "Grown Children of Retirees or Other Family Members" versus Share Saying"Retirees Themselves, through Their Own Savings" 90% Grown Children or Other Family 78% 80% Members 72% 70% Retirees Themselves 58% 60% 56% 50% 50% 45% 38% 38% 40% 34% 31% 30% 23% 20% 16% 10% 0% China Singapore Hong Kong Malaysia Taiwan South Korea 8
    • Support for family responsibility for personal care forthe frail elderly also appears to be weakening. "Who, ideally, should be mostly responsible for providing personal care to retirees when they need help with everyday living or are sick or disabled?" 31% Grown Children of Retirees Malaysia 29% or Other Family Members 29% Retirees Themselves, by 37% Paying for Caregivers Singapore 25% 32% Government, by Paying for Caregivers 29% China 11% 42% 23% Taiwan 24% 47% 29% Hong Kong 16% 48% 14% South Korea 23% 54% 0% 10% 20% 30% 40% 50% 60% 9
    • The Expectationsof Future Retirees 10
    • In some countries, rates of multigenerational living are due to decline among future retirees.Share of Respondents Living or Expecting to Live with Grown Children when They Are Retiredor Elderly Actual Share for Elderly Expected Share for Current Workers Aged 20-59 70% 63% 60% 57% 54% 54% 51% 52% 50% 46% 42% 40% 40% 35% 37% 30% 20% 10% 10% 0% China Malaysia Taiwan Singapore Hong Kong South Korea 11
    • In all countries, future retirees expect to be much lessdependent on the financial support of their children.Ratio of Respondents Who Are Net Recipients of Financial Support from Their Grown Children toRespondents Who Are Net Providers: Actual Ratio for Current Retirees Aged 60 & Over versus ExpectedRatio for Current Workers Aged 20-59 0.3 South Korea 1.7 0.7 Taiwan 1.7 Current Workers 0.5 Current Retirees China 1.8 1.4 Singapore 5.1 1.4 Hong Kong 10.0 2.4 Malaysia 16.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 12
    • Almost everywhere, larger shares of future retireesexpect to receive benefits from the state pension system.Share of Respondents Who Receive or Expect to Receive Income from a State Pension System:Actual Share for Current Retirees versus Expected Share for Current Workers 100% Current Retirees 88% 90% 90% Current Workers 82% 80% 78% 71% 72% 72% 70% 63% 59% 60% 60% 60% 50% 47% 40% 30% 20% 10% 0% China South Korea Malaysia Taiwan Singapore Hong Kong* Figures refer only to “basic pension system for urban employees.” 13
    • Much larger shares of future retirees also expect to receive income from financial assets.Share of Respondents Who Receive or Expect to Receive at Least Some Income from FinancialAssets When They Are Retired or Elderly, by Type of Asset: Actual Share for Current Retireesversus Expected Share for Current Workers Aged 20-59 Bank Deposits Insurance or Annuity Policies Stocks or Bonds Current Workers Current Workers Current Workers Current Current Current Retirees Retirees Retirees 20-39 40-59 20-39 40-59 20-39 40-59China 66% 65% 38% 60% 48% 18% 32% 19% 4%Hong Kong 75% 58% 42% 75% 61% 21% 66% 41% 30%Malaysia 45% 30% 14% 39% 48% 29% 49% 58% 33%Singapore 72% 77% 67% 86% 77% 53% 65% 52% 30%South Korea 61% 53% 38% 54% 50% 14% 20% 22% 13%Taiwan 76% 56% 58% 76% 63% 39% 42% 31% 27% 14
    • Today’s working generations expect to retire at later ages than today’s retirees did.Share of Respondents Who Retired or Plan to Retire after Age 60: Actual Share for CurrentRetirees versus Expected Share for Current Workers*80% 73% Current Retirees 69%70% Current Workers* 61%60% 57%50% 48% 47%40% 36% 32% 32% 30%30%20% 17%10% 8% 0% Malaysia China Singapore Taiwan Hong Kong South Korea *Excludes workers who do not plan to retire. 15
    • Very large shares of future retirees expect to continueworking even after they have “retired.”Share of Respondents Who Receive or Expect to Receive at Least Some of Their RetirementIncome from a Job or a Business They Own: Actual Share for Current Retirees versusExpected Share for Current Workers* 25% Hong Kong 35% Current Retirees 37% Malaysia 44% Current Workers* 40% South Korea 51% 47% Taiwan 67% 40% Singapore 76% 58% China 87% 0% 20% 40% 60% 80% 100% *Excludes workers who do not plan to retire. 16
    • Policy Lessons 17
    • Three Policy Imperatives Establish robust floors of old-age poverty protection. Strengthen savings-based retirement provision. Raise retirement ages and combat age discrimination. 18
    • Median Income of Elderly Respondents, as a Percent of Median for All Respondents South Korea 39% Hong Kong 49% Malaysia 50% Taiwan 54% China 78% Singapore 80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 19
    • Average Net Financial Asset-to-Income Ratio of Survey Respondents, by Age 1.6 China 0.9 2.0 Hong Kong 1.3 1.5 Malaysia 1.0 Age 40 1.1 Singapore Age 50 1.8 1.7South Korea* 1.7 1.4 Taiwan 1.8 0.0 0.5 1.0 1.5 2.0 2.5 *Data for South Korea come from the Korean Statistical Information Service s 2011 Survey of Household Finances. 20
    • Share of Respondents Who Worry about Being Poor and in Need of Money in Retirement: Actual Share for Current Retirees versus Expected Share for Current Workers100% Retirees Aged 60 and Over90% 87% 87% Current Workers80% 73%70% 65% 62% 58% 58%60% 51% 51% 50%50% 44%40% 33%30%20%10% 0% Malaysia Singapore South Korea Taiwan China Hong Kong 21
    • Share of Respondents Saying Government Should "Require Workers to Contribute More toPay for Government Retirement Benefits" versus Share Saying It Should "Require Workers toSave More for Their Own Future Retirement" Contribute More Save More100% 92% 92% 89%90% 87% 86% 79%80% 71% 69% 69%70%60%50% 44%40% 36% 33%30%20%10% 0% China Hong Kong Malaysia Singapore South Korea Taiwan 22
    • Share of Respondents Saying "Government Should Raise the Retirement Age" Taiwan 29% China 42% Malaysia 49% Hong Kong 54% Singapore 60%South Korea 85% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 23