Insights into Retirement Risks and Opportunities in Asia Pacific Markets

Transcription

1 Insights into Retirement Risks and Opportunities in Asia Pacific Markets R. DALE HALL, FSA, MAAA, CERA, CFA Managing Director of Research, Society of Actuaries Monday, September 17, 2018

2 About the Research Consumer perception Collaborative research between LIMRA and SOA Objective: Study the current state and future opportunity of the retirement market in Asia Methodology: Survey of 9,000+ consumers Age band: years, who make financial decisions Target Market: Covering 9 markets including China, Singapore, Hong Kong, Japan, South Korea, India, Indonesia, Taiwan, Thailand

3 Rapid Growth of 60+ globally Market Landscape & Trends Building an Agency Model Future of Insurance: Market maturity model Future of Operations: Operations maturity model

4 Population Growth: Overall Population 60+ Population Asia 19% 148% Japan -15% 10% Thailand -5% 114% Taiwan -3% 116% China -2% 123% South Korea 0% 125% Hong Kong 14% 112% Singapore 19% 167% India 27% 171% Indonesia 25% 195% Source: UN Population Division, LIMRA International Research

5 Asia s NEW 60+ population by 2050: > Current Europe OR 2X US 300% Additional 60+ population by 2050 vs (Millions) 250% Malaysia, 7 Percentage Growth of 60+ population 200% 150% 100% Asia, 759 China, 264 Hong Kong, 2 Taiwan, 5 India, 200 S Korea, 12 Indonesia, 41 Singapore, 2 Thailand, 12 50% 0% Japan, 4 Size of bubble represents absolute increase in 60+population (in millions) Source: UN Population Division, LIMRA International Research

6 Population Pyramid the old, the young & Asia 100+ Age yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs. 0-4 yrs. Ma le 2015 : Asia Femal e Percentage 2 0in Age 2group : Nigeria Young country 2050: Asia 100+ yrs. Age yrs. Male Female yrs yrs yrs yrs yrs yrs yrs yrs. 0-4 yrs Percentage 2 0 in Age 2 group Age yrs yrs yrs yrs yrs yrs yrs yrs yrs yrs. 0-4 yrs. 2015: Japan 2 nd Oldest country Ma le Female Percentage 2 0in Age 2group

7 Asia has entered a phase of rapid aging SuperAged 28% Aged 21% 28% 21% Aged 10 Aging Super Aged CN, HK, JP SG, KR, TW Aged Aging 14% 14% 10 CN, SG, TW 5 KR, TH Young 7% 7% Asia China Hong Kong India Indonesia Japan Singapore South Korea Taiwan Thailand Source: UN Population division, LIMRA International Research

8 Most are living longer than ever before Average Life expectancy at 60 years Age ASIA Hong Kong Japan Singapore South Korea Taiwan Thailand China India Indonesia Source: UN population division Increase by Increase by Note: Differences in summation are due to rounding off

9 8 Lower fertility rate is leading to population decline Live births per woman during childbearing years WORLD ASIA China Hong Kong Taiwan Japan South Korea India Indonesia Malaysia Singapore Thailand Source: UN Population Division, LIMRA International Research

10 Socio economic changes & shrinking population is resulting in smaller households Average size of households Japan South Korea Taiwan China Hong Kong Thailand Indonesia Singapore India Source: Timetric Insurance Intelligence Center

11 Most Asian markets were ranked in the bottom half Pension Sustainability Index Region TOTAL Demographics Public Finance Pension System Market Score Ranking Ranking Ranking Ranking Hong Kong Singapore South Korea Indonesia Taiwan Japan India China Thailand HK SG KR ID TW JP IN CN TH Source: 2016 Pension Sustainability Index - Allianz

12 Majority of the retirement risks can be managed Key Retirement Risks Longevity/ Mortality Risk Public Policy Risk Retirement Risk Investment Risk Healthcare Risk Inflation Risk Secure Retirement Institute- LIMRA

13 How are the consumers preparing in these challenging times? 13

14 People have basic expectations from retirement life Hopes and aspirations for their retirement (Top 5) Maintain physical health and well being Spend more time with friends and family Financially support my family Learn a new skill/hobby Travel more Asia Retirement Study 2017 LIMRA/SOA

15 2/3 rds consider they should be responsible for retirement funds Individuals themselves should be responsible for providing retirement funds Thailand, 84% Singapore, 72% China, 71% Indonesia, 64% South Korea, 77% Taiwan, 73% Japan, 69% India, 63% Hong Kong, 52% Asia Retirement Study 2017 LIMRA/SOA

16 Which market had the highest percentage where parents were financial dependent on the respondent? Japan Hong Kong Thailand Financial Dependence

17 Parents Financially Dependent on Responding Household Thailand, 64% Singapore, 46% Asia Average, 41% Indonesia, 26% South Korea, 26% Taiwan, 40% Japan, 17% India, 56% Hong Kong, 51% Asia Retirement Study 2017 LIMRA/SOA

18 Nearly ½ of respondents don t have formal retirement plan Does your household have a formal written plan for managing your income, assets, and expenses during retirement? 83% 79% 77% 73% 71% 65% 52% 49% 43% 17% 21% 23% 27% 29% 35% 48% 51% 57% Japan China South Korea Singapore Taiwan Hong Kong Indonesia India Thailand Yes No

19 Predictably most are looking for safer options How does your household plans to generate income from your retirement savings? Withdraw only interest and dividend earnings, but not principal Generate rental income by investing savings, in property Buy or look for guaranteed lifetime income product Opt for a reverse mortgage A corporate annuity with a tax benefit Withdraw some principal and some interest on a regular basis

20 Start saving/investing from around late 30 s/early 40 s Started Saving/Investing for retirement at the age of Singapore 37 Japan 42 Hong Kong 38 India 38 Taiwan 39 South Korea 44 Indonesia 38 Thailand And plan to retire/retired by the age of Singapore 62 Japan 62 Hong Kong 61 India 62 Taiwan 62 South Korea 63 Indonesia 61 Thailand 61

21 nearly ½ regret delaying retirement planning I regret, I started saving and investing for retirement a bit late' OR 'I have not started saving for retirement at all'? Thailand India Hong Kong South Korea Singapore Japan Taiwan Indonesia 60% 58% 57% 55% 54% 51% 49% 47%

22 Resulting in HUGE GAP in retirement funds How much of retirement funds do you anticipate to have/had when you turn 60? Japan Thailand South Korea Hong Kong Indonesia Singapore India Taiwan Expected saving of retirement fund 85% 85% 84% 82% 81% 80% 75% 70% 0-79% % 15% 15% 16% 18% 19% 20% 25% 30%

23 How long do they expect to live after retirement? Expected retirement life at 60 V.S Life expectancy at 60* +/ Singapore Japan Hong Kong Taiwan % -24% -19% -16% South Korea Thailand % -7% 19.6 Indonesia % 24.3 India % Asia Retirement Study 2017 LIMRA/SOA; UN Population Division * data, considering the age band and quota

24 Majority do not seek help to create retirement plan Did a financial professional help your household create a retirement plan? 82% 78% NO 69% 68% 65% 61% 55% 54% 49% Japan South Korea Singapore China Taiwan Hong Kong Thailand Indonesia India

25 Which market had the highest percentage of respondents interested in annuities for lifetime income? Japan India Annuity Preferences Singapore

26 Majority want to convert retirement assets into annuity I would like to convert part of my retirement assets into buy an annuity product and create lifelong income stream Yes 86% 82% 79% 73% 73% 73% 66% 63% 45% India Indonesia Taiwan Thailand Singapore Hong Kong China South Korea Japan

27 Desired Product Features Which of the following product features are most important to you? (across markets) Income that is guaranteed for life Initial investment amount is preserved or protected Guaranteed returns on investments Control over how investments are managed Income amount can be changed as needs change Income will remain the same or fixed throughout retirement Income has the potential for growth with market

28 Which market included post offices as a major potential purchase point? Japan India Points of Purchase Hong Kong

29 Banks are the most preferred channel to buy From where would you buy the product with the key features you selected (Top 2) Singapore Japan Hong Kong India Bank Bank Bank Bank Broker/ Financial Advisor Post Office Broker/ Financial Advisor Broker/ Financial Advisor Taiwan South Korea Indonesia Thailand Bank Bank Bank Bank Broker/ Financial Advisor General Agency Agent/Tied agency Agent/Tied agency Asia Retirement Study 2017 LIMRA/SOA

30 Hong Kong Summary Points Demography: Quickly turning from an aged to super-aged market Social Pension: Pressure to provide adequate coverage; General design for low level of protection Retirement planning: 89% have taken at least one step ; 65% do not have formal written plans Willingness to buy: Guaranteed lifetime income is a strong, preferred product feature. 73% of respondents willing to convert a portion of assets to annuities to generate lifetime income Asia Retirement Study 2017 LIMRA/SOA

31 Summary Demography: Elderly population will more than double; Speed of aging has reached unprecedented levels; individuals continue to underestimate longevity Pension sustainability: Under severe need to reform Funding: Individuals consider its their own responsibility to fund retirement, and not depend on government Retirement planning: Most start planning for retirement very late Funding Gap: Most are worried about the shortage of retirement funds but still do not seek professional help Willingness to buy: On the bright side people want to buy financial products (annuities), through banks and other channels Asia Retirement Study 2017 LIMRA/SOA

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