April 27, 2006

Retirement is seen as freedom says survey

By TradeArabia News Service

People are largely positive about the prospect of getting older and entering into retirement, says a survey. A majority of them equate retirement with freedom, happiness and satisfaction.

However, greater longevity, coupled with a forecast falling birthrate may lead to an ageing population that ultimately puts financial pressure on traditional family care networks, says the HSBC survey entitled “Future of Retirement – What the World Wants”.

Over 20,000 people and 6,000 employers were surveyed across 20 countries for the study. This follows a similar survey conducted by HSBC over 10 countries last year, but now includes countries from the Middle East for the first time.

Changing demographics could have a severe impact on the region’s retired populations. For a start, numbers are increasing. According to UN data, in 2000 in the UAE, for every 100 people of working age (15-64) there were only four older people (aged 65+). This figure is forecast to leap to 28 by 2025 – less than 20 years away. In Qatar, the number jumps from 2 to 21 and Bahrain experiences a similar shift from 4 to 20. Of course, in reality, people tend to enter the workforce later than 16 and leave before 65, so the actual effect may be even more pronounced. These startling changes are the positive effects of better healthcare enabling us to live longer.

The survey reveals that people are largely positive about retirement – although retirement doesn’t mean stopping and never working again. About 72 per cent of Saudis, 50 per cent of Egyptians and 56 per cent of Indians expect to go back and forth between periods of work and leisure; others expect to do some part time work.

The reasons for this are split: Arabs want to work to have something meaningful to do – a sense of purpose; Indians expect that they might need the money in retirement.

Nevertheless, 66 per cent of Saudis, 37 per cent of Egyptians and 69 per cent of Indians associate retirement with freedom, while almost half of those surveyed feel that retirement is a time for rest and relaxation. Less than one in five people say that retirement means never having to work again.

Across the region, the anxieties associated with retirement were boredom and loneliness – perhaps the reason why people want to remain active and engaged.

These positive attitudes reflect the global picture, where people are viewing retirement as a whole new chapter in their life, rather than ‘waiting for the end’.

Respondents all over the world overwhelmingly see retirement as a positive time of life. Globally, around two-thirds of respondents associate retirement with freedom, happiness and satisfaction. In the region, having a strong religious faith, loving family and friends and keeping fit were seen to be the keys to happiness. Saudi Arabia topped the global league of people who said that having ambitions and dreams were important too, the survey said.

Approximately two-thirds of survey respondents from the region said that they did not agree with mandatory retirement, based on their age. Saudis thought that an average age of 53 was a good time to retire, for both men and women. Egyptians thought that age 60 for men and 50 for women was when people should retire and Indians expected to work a little longer – men to 64 and women to 59.

This attitude rejecting a mandatory retirement age, coupled with a desire to remain in the workplace – but not necessarily in full-time work – has implications for employers. There is an opportunity to retain experienced staff, perhaps to train and develop younger colleagues, and to consider more flexible employment practices to accommodate older workers.

In more mature economies that have already aged, there is a forecast skills shortage as people leave the workforce faster than young people join. However, few employers have identified this future business threat. For a region that traditionally looks to its children to support elder parents, it is interesting to note that 46 per cent of Saudis, 29 per cent of Egyptians and 57 per cent of Indians are concerned about the future cost of caring for older relatives. This is verified by a lack of planning, particularly among Arabs, compared to Asians.

In the survey, only 21 per cent of Saudis and 34 per cent of Egyptians had calculated their potential needs and possible income sources for retirement, compared with 65 per cent of Indians. When asked if they had saved specifically for retirement, only 38 per cent of Saudis and 35 per cent of Egyptians had, compared with 74 per cent of Indians.

What the survey also found was that there was confidence that the levels of government support would not change in the future. This was in contrast to the global picture where respondents felt a ‘confidence gap’ between what their government promised and what they would ultimately deliver. However, when asked who should and who ultimately will bear the cost of retirement, respondents were clear that the family, rather than the government, would bear the responsibility.

The survey charts global attitudes across developed, mature economies and economies in transition to maturity. Gulf nations have an opportunity to now consider what it means to have a rapidly ageing population - for us as individuals and for our businesses. It is likely that people will continue to be active and work for longer – although perhaps not full-time. In addition, traditional family support models will need more financial resources to care for ageing relatives, for longer than before.

As Middle East economies mature and acquire significant numbers of older people for the first time, we may bypass the ‘golden years’ model of retirement and go straight to the ‘new chapter’ model. This sees people working towards financial independence (supported by a mix of their own savings, their family or a pension) and transitioning to a more flexible work-style, interspersed with periods of leisure, teaching, learning and family time, says the study.

“ HSBC is very much interested in people’s attitudes towards retirement, later life and what employers are doing to prepare for the ageing of their staff. We believe that information gathered from the survey will help individuals, employers and governments to respond positively to the challenges raised by population ageing,” said John Holden, regional manager insurance businesses, HSBC Bank Middle East Limited.

The Future of Retirement – What the World Wants was conducted by market research company Harris Interactive under the guidance of HSBC and Age Wave. The analysis of data was carried out by the Oxford Institute of Ageing, part of the Oxford University’s Social Science Division.