Retirement security is a growing issue in Hong Kong and the wider Asia Pacific region, according to a survey by global advisory solutions company Willis Towers Watson.
The findings of the Global Benefits Attitudes Survey reveals that 58% of Hong Kong employees think retirement security has become a more important issue for them over the last 2-3 years. However, only around one-third of them are confident of having enough resources to live comfortably throughout retirement.
“The survey shows that majority of Hong Kong employees do not prioritize their own finances towards saving for retirement until their 40s,” said Elaine Hwang, Head of Retirement at Willis Towers Watson. “Employees generally do understand that they should save for retirement, but the push factor is not strong at earlier ages.”
Employees also expect their employers’ retirement plans as their primary way to save for retirement, but not all employers are willing to take on proactive responsibilities for employee financial well-being beyond statutory retirement contributions.
Up to 44% of the surveyed employees in Hong Kong are willing to sacrifice a portion of their paycheck for greater employer-provided retirement benefits, and even more (45%) are willing to make a similar trade-off for more generous benefits. The same is not true for health care benefits. Only 30% are willing to pay more each month for a more generous health care plan.
Strong interest in phased retirement
The survey suggests that a considerable minority (17%) of Hong Kong employees expect to still be working in their 70s. Those who expect to work longer are more likely to be in poor health, highly stressed or disengaged with their job.
In contrast to late retirement, employees are expressing a strong interest in phased retirement. Over half (54%) of the respondents said they will keep working for some time before fully retire. Stronger interest is observed in highly engaged employees and those from the age group of 40+.
Employers can start with an easy step
Following the proposed plan of the Government to cancel the Long Service Payment offsetting mechanism from MPF balances, money in the MPF pool will be growing and entirely reserved for member’s retirement.
“It is more important than ever for employees to pay attention to their own MPF investment portfolio, while employers to play a more crucial role in enhancing member engagement and encouraging savings for retirement,” said Eric Lam, Head of MPF Advisory Services at Willis Towers Watson.
“Running regular review of MPF providers on their performance and services is the first step towards a proper governance,” Eric Lam pointed out. “Employers can proactively review whether their employees are being provided with the optimal retirement investment opportunities and services based on their different needs and life stages.
Phased retirement seems to be an excellent idea for both employers and employees. “Phased retirement programmes are not uncommon in Hong Kong. Having said that, we observe that employers may not have a holistic programme in place, and as a result, the contract terms and benefits items are not adequately established,” remarked Elaine Hwang.
“It’s time to rethink the role of employers in helping employees save or invest wisely for retirement, by providing adequate education, guidance, and tools,” added Elaine Hwang