HR NEWS

Hong Kong Staff’s Financial Savings for Retirement Fall Far Short: Survey

Hong Kong Staff’s Financial Savings for Retirement Fall Far Short: Survey

The latest study by the Hong Kong Investment Funds Association (HKIFA) indicated that most Hong Kong employees would need more financial savings for retirement. According to the survey conducted during the third quarter of 2017, only 23 percent respondents believe that they would have enough money after retiring.

Considering current living standards in Hong Kong, an employee would need to save at least HK$3.1 million when they reach 65 if they want to maintain the same level of living after leaving the workforce. Meanwhile, the survey revealed that Hong Kong employees on average expected to save about HK$1.2 million by the time they retire. This means that they would fall short by about HK$2 million for their life after retirement, South China Morning Post reports.

As Hong Kong residents’ life expectancy are getting longer, the pension shortfall has become a new concern in the region. According to a Hong Kong government estimate, the average life expectancy for Hong Kong men will increase from 81.3 years in 2016 to 87.1 by 2066 and for women it will rise from 87.3 years to 93.1.

In general, there is no official retirement age in Hong Kong but many private companies ask employees to leave when they reach 60. However, men who retired from the workforce last year are expected to finance another 21.3 years of life, while the average woman faces more than a quarter of a century, or 27.3 years, of life. By 2066, that will rise to 27.1 years for men and 33.1 years for women without salary.

In a bid to address such potential shortfall in the future, 64 percent employees surveyed by HKIFA plan to adjust their lifestyle by cutting down their daily expenses, traveling less, or postponing their retirement. The other 53 percent said they want to lower their investment risks – a move that might further reduce their investment income.

Despite being aware about the shortfall, the survey noticed that most employees have not done enough to prepare for their retirement. More than one third respondents have not understood the contribution of Mandatory Provident Fund (MPF) (Hong Kong’s compulsory retirement scheme) to their overall retirement savings pool. On average, employees expect that MPF will only contribute 38 percent to their retirement funds.

While they know that they cannot rely only on MPF for retirement protection, not many employees are taking necessary action to address the funding gap. The survey noted that only 30 percent respondents allocating a particular amount of their income for retirement purposes outside MPF.

If Hong Kong employees intend to maintain the standard of living post retirement, they usually need to reach an income replacement ratio of about 70 percent of the final year of pre-retirement income. Based on this calculation, if one is to support a retirement life of 20 years, the employee has to save about 23.6 percent of their earnings a year over their working life. As such, Hong Kong employees should put aside another 13.6 percent of their income for other retirement purposes in addition to the 10 percent MPF contribution to meet their needs.

Source: HR in Asia

5 months ago

By admin


Social Share : Share      

Comments.....

Submit new comment

Most Viewed

Walmart gives workers a way to get paid earlier...

6 months ago

Wanted Assistant Manager - Admin, National Film Development Corporation Ltd. Cli...

6 months ago

New skin patch may help reduce obesity: Study...

6 months ago

More than 7,900 posts created in government departments in 2016-17: Indian Gover...

11 months ago

Artificial Intelligence more concerning than North Korea: Elon Musk...

10 months ago

Unitech money laundering case: Court rejects bail plea to promoters, sends Sanja...

10 months ago

AAI recruitment 2017: Vacancies for 200 Junior Executive engineer posts announce...

8 months ago

Malaysia Airlines appoints new CEO...

8 months ago

Why ‘Most-Hated’ CEO is swaggering to jail...

11 months ago

Canada's spy agency reaches settlement over harassment allegations...

6 months ago

Most Shared

Mass redundancies for Quebec cookie factory...

2 years ago

Trump this: 5 bold predictions for how he’ll impact HR...

2 years ago

InfoTycoon appoints existing President and COO Kevin George to succeed James Dav...

2 years ago

Sushant Dwivedy joins Aspiring Minds as SVP-Enterprise Client Solutions...

2 years ago

Uber introduces special reward programme...

2 years ago

Standard Chartered Bank to reduce 10% corporate & institutional banking staff...

2 years ago

National CineMedia (NCM) creates Affiliate Partnerships team, names Stacie Tursi...

2 years ago

OCC Names New CFO, Treasurer, and Chief Compliance Officer...

2 years ago

Beards at work are now a major turn-off say 61% of female office workers...

2 years ago

First female fast jet pilot of Britain hired as director at PwC...

2 years ago