May 16, 2006

Hongkongers willing to save for a worry-free retirement

By Dennis Eng

Hong Kong people want to enjoy their retirement years free of worry and are willing to save more to realise this comfortable lifestyle, a global survey has found.

According to HSBC's "The Future of Retirement: What the World Wants" study of 21,000 adults around the world, there is a greater belief in Hong Kong that retirees should financially support their own retirement. The study found 56 per cent in Hong Kong held this view compared to 51 per cent for the region and 43 per cent globally.

Although only 12 per cent in Hong Kong felt this burden should rest with the government, there was a relatively high expectation - 35 per cent - in the city that the administration should help finance an ageing population by boosting compulsory private savings.

Gerontologist Ken Dychtwald, president and chief executive of San Francisco-based consultancy Age Wave, which participated in the study, said that people working and saving more now would strain consumer spending in the short term.

"However, these people will be spending later," Dr Dychtwald added.

He said that enforcing higher private savings was not a political choice and that the challenge for Hong Kong and other economies was to strike a balance between saving for the future and stimulating consumer activity.

"I think the level of productivity in Hong Kong is so high and extreme that people just can't wait to reach retirement," Dr Dychtwald said.

The survey also found strong support for the government to raise the retirement age, at 33 per cent compared to 24 per cent globally. Increasing taxes and reducing pensions only gained the support of 15 per cent and 8 per cent respectively in Hong Kong, just above the global levels.

Dr Dychtwald warned that forcing people to retire at a relatively early age - when average life expectancies could conceivably reach beyond 100 years - would lead to a brain drain. He said that there was an increasing trend of the working population taking sabbaticals and working longer.

The growing burden on future generations, which are expected to shoulder some of the financial responsibility, is being exacerbated by the low birth rate of 0.9 per couple last year versus almost three children per couple in 1980. The mainland's birth rate is 1.7 per cent.