MassMutual Asia Announces Key Retirement Survey Findings
Only 30% of Hong Kong respondents confident of a satisfactory retirement life
Nearly 80% underestimate necessary retirement funds

Jan 16, 2012 Macau

Retirement is an inevitable part of most people’s lives. In order to understand the expectations and planning for retirement life and the risk-management measures carried out by people in both Hong Kong and China, MassMutual Asia Ltd. (MassMutual Asia) specially commissioned a telephone survey by the Public Opinion Programme of the University of Hong Kong in the fourth quarter of 2011 in Hong Kong and Shanghai.

The survey studied the respondents’ level of confidence in a satisfactory retirement life. The average rating by Hong Kong people is 6.1 out of 10, lower than the 6.9 as rated by Shanghai people. Only 30% of Hong Kong respondents rated their confidence level at 8 or above. The results revealed that their major worries about retirement are: uncertainty about the future (26%), inflation (24%), economic downturn and unemployment (20%), and being ill (18%). These factors all affect the overall confidence of Hong Kong people as regards their retirement lives.

Hong Kong people now expect to retire at an average age of 57.8. Although the survey revealed that 70% of male and 50% of female respondents expect to retire at age 60 or above, figures from the Hong Kong Census and Statistics Department show that the employment rates of those aged 60 and above are 59% and 21% for males and females respectively. In this increasingly competitive market environment, actual retirement always comes earlier than expectations. This is the main worry of those 20% respondents who are concerned about economic downturn and unemployment. With longevity steadily increasing over the past 20 years, life expectancy at birth for males in 2039 will be 83.7 years and for females will be 90.1. Better planning is therefore a must in order to finance an unexpectedly long retirement.

When compared with the 2009 retirement survey results, the respondents' average monthly retirement budget has increased. Near to 50% of respondents need at least HK$10,000 for their monthly retirement budget, a 10% increment compared with the 2009 survey results. Because of inflation, number of respondents who need a monthly retirement budget of less than HK$5,000 has reduced by 10%. The survey also calculated the actual retirement funds needed by each of the respondents based on their expected retirement age and monthly retirement budget, and then compared this amount with their projected retirement funds. The results indicated that not only had some 80% of respondents underestimated the funds they would actually require for retirement, but also that 60% of respondents had seriously underestimated this, with their projected retirement savings amounting to only 50% or less of the actual amount required.

Although respondents are aware of the risks of being ill during their retirement life, over half of respondents (52%) do not have a regular body check-up. Some 35% of Hong Kong respondents have a check-up once every one to two years, compared with 73% of Shanghai respondents. Hong Kong people show a lower awareness of health protection. Moreover, almost 50% of respondents are not insured against critical illness. When the reasons for this low usage rate were queried, respondents said they had 'no need', were 'not willing to pay' or ‘would like to rely on government medical services’. Of those who are insured, half of them have a sum insured of less than HK$500,000. The survey also revealed that most respondents underestimate the risk of critical illness. A heavy burden will therefore be borne by their families in the event that they suffer from a critical illness.

Ms Jeanne Sau, Senior Vice President & Chief Marketing Officer, MassMutual Asia, said, “When compared with the past survey findings, most people still underestimate the retirement funds they need. They are facing a great challenge, with factors such as earlier-than-expected retirement age, prolonged retirement life, and inflation, thus affecting their confidence in a satisfactory retirement life. In addition, most people are weak in risk management and have not prepared proper health protection.” 

Ms Sau continued, “We cannot guarantee our health or accurately estimate our life expectancy, but we can transfer the risk and ensure a satisfactory retirement life.”

Ms Sau recommends that Hong Kong people seek advice from professional financial advisors who can provide a detailed financial analysis to help them better understand their financial needs. She further suggests an annuity plan as a core component for ensuring lifetime retirement income, and that the annuity income should comprise of over 50% of the total retirement funds as a safety net. A comprehensive health and medical insurance plan is also important in ensuring quality treatment in case of illness.

Currently there are two types of annuity plan in the market: one that provides the insured with lifetime annuity income, without any pre-set period; and one that usually provides the insured with pre-set installment payments for up to a 10- or 20-year period, based on the accumulated value of the policy. As the latter does not provide a lifelong income guarantee, it may not be able to adequately cover the risk of prolonged life expectancy. The Target Annuity Saver offered by MassMutual is a genuine lifetime annuity plan, rarely found in the market, which guarantees monthly income without a pre-set period. The Target Annuity Saver has received overwhelming support from customers since its launch.

MassMutual Asia Ltd. is a member of the MassMutual Financial Group. Headquartered in Hong Kong, MassMutual Asia has over two thousand consultants. The company delivers professional one-stop risk- and wealth-management consulting services, including a series of flexible and innovative life insurance products, retirement plans, and investment services. Besides the life insurance business, MassMutual Asia also operates several subsidiaries in Hong Kong, including MassMutual Asia Investors Ltd., which provides an array of wealth-management services, MassMutual Trustees Ltd., which focuses on MPF, and MassMutual Insurance Consultants Ltd., which handles general insurance.
 
MassMutual Financial Group is a marketing designation for the Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliates. With US$448 billion¹ in assets under management and 13 million customers, MassMutual Financial Group is a global, growth-oriented and diversified financial-services organization. Established in 1851, MassMutual enjoys exceptionally high financial ratings from major ratings agencies, including A.M. Best Company "A++" (Superior; top category of 15), Fitch Ratings "AA+" (Very Strong; second category of 21) and Standard & Poor's "AA+" rating (Very Strong; second category of 21)² and is ranked in the renowned FORTUNE 500 as one of the “Five Largest US Life Insurance Companies”³.

Ms Jeanne Sau, Senior Vice President & Chief Marketing Officer, MassMutual Asia, announces key retirement survey findings.

Note:
1. Figure as of December 31, 2010. 2. Ratings apply to Massachusetts Mutual Life Insurance Company and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company. Ratings are as of January 1, 2012 and are subject to change. 3. Ranked according to the aggregate results of [Insurance: Life, Health (Mutual)] and [Insurance: Life, Health (Stock)] on the total revenues for 2010, based on the FORTUNE 500 as published on May 23, 2011.