Asia’s working class may face hard times in retirement
13 Jul 2012
Retirement can be a time of economic hardship for workers in Asia's rapidly-aging emerging markets in the current environment, according to a report by Center for Strategic and International Studies.
Balancing Tradition and Modernity: The Future of Retirement in East Asia found strong support for individuals taking greater responsibility for financing their own retirement and the importance of long-term savings to meet retirement needs. CSIS conducted the survey in China, Hong Kong, Malaysia, Singapore, South Korea, and Taiwan.
"As societies worldwide age, the challenge for governments and businesses is to anticipate and meet the needs of tomorrow's growing elderly populations," said the report's authors Richard Jackson and Neil Howe. "The challenge is especially daunting in East Asia, because the region faces onrushing age waves while it is still developing and modernising."
Although retirement prospects are improving for members of today's working generations, most are still not adequately prepared, the survey showed. Gaps in pension coverage and low replacement rates mean that government and employer retirement systems are unlikely to meet their needs—and very few are saving enough on their own to ensure a decent standard of living in retirement.
The survey, sponsored by Prudential plc, also found the traditional "Confucian ethic" expectation that families themselves will provide for their elderly members is under unprecedented pressure. Only small minorities (from a low of 4% in China to a high of 22% in Singapore) believe that grown children should be responsible for the retirement income of their parents.
Author: Richard Newell