Session 5b2 Annuity Developments in Pension Market. Janet Li, CFA

Transcription

1 Session 5b2 Annuity Developments in Pension Market Janet Li, CFA

2 Annuity Developments in Pension Market JANET LI, CFA Executive Committee Member, the Hong Kong Retirement Schemes Association Director, Investments, Greater China, Willis Towers Watson 29 August 2016 Key types of life annuity products Single premium life annuity Single premium joint life annuity Single premium joint and last survivor annuity 2

3 International experience Country/ market Accumulation Stage Withdrawal Stage Hong Kong Australia New Zealand UK Netherlands Singapore US Canada Government Support Key (on a relative basis) High Average Low Popularity of Annuity Products Government Role 3 Old-age income support is a shared responsibility Pillar Characteristics Application to Hong Kong 0 Basic or Social pension, at least social assistance, universal or means tested Yes, through CSSA and Old Age Pension 1 Public pension plan, publicly managed, DB None established 2 Public pension plan, DC (may include special occupational schemes in the form of DB) Yes, through MPF and privately managed 3 Occupational or personal pension plans, partially or fully funded DB or DC Yes, through ORSO; those exempted from MPFA 4 Access to informal support including formal social programs such as home ownership, medical care, family support. Yes, to some extent Source: World Bank 4

4 Post retirement options in HK Variable annuities Guaranteed funds Hard guaranteed fund Soft guaranteed fund Reverse mortgage 5 Potential direction for post-retirement market in Hong Kong Combined effect of pressure from government to support ourselves Desire for companies to play a bigger part through innovation Potential direction in postretirement market Must also focus on efficiency fees, commissions, expenses, solvency requirements Existing solutions using currently available products Deferred (mandatory) annuitisation Investment buckets for income drawdown products 6

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