An ‘ideal’ retirement will take HK$5.11m in savings, up 18pc from last year: Allianz survey
The cost of enjoying an ideal retirement has surged 18 per cent on year to HK$5.11 million, according to Allianz Global Investors
The average Hongkonger will require HK$5.11 million (US$654,679) in savings to reach their ideal retirement, up 18 per cent from last year, according to a retirement confidence survey by Allianz Global Investors, which noted that the figure was the highest in the survey’s four year history.
Many retirees will only accumulate HK$3.19 million in savings, equivalent to 62 per cent of their stated ideal, leaving a shortfall of HK$1.92 million, said Iris Ma Mei-suen, head of client relations.
However those married with children were more optimistic towards retirement life compared to those married without children.
Children bring greater family commitment, resulting in proactive retirement preparations.
The survey interviewed 800 respondents aged 25-64 with monthly personal income of at least HK$12,000 (US$1,538).
Hong Kong, like many developed countries, is tackling social and health challenges arising from a rapidly ageing population and shrinking workforce. About 14.5 per cent of its population are aged 65 or older, and this is forecast to increase to about 30 per cent by 2050.
The city’s Mandatory Provident Fund requires employers and employees to contribute equal amounts up to HK$1,500 each on a monthly basis, under its mandatory retirement savings scheme.
However critics say this system fails to provide adequate coverage and contains many drawbacks – including a legal loophole where employers can settle severance and long-service payments using contributions made to the fund. In 2016, employees lost HK$3.85 billion as a result of this technicality.
In April the government said it plans to launch a new public annuity scheme to provide participants with lifetime payouts after they pay a lump-sum premium capped at HK$1 million. Under such a universal pension system, the government will not need to pay all the costs, which may allow a bigger payout for those who really need the support.