- 30% of Hong Kong’s working population fails in RQ and will need to delay their retirement by 11 years on average
- 76% of parents agree that they are too busy taking care of their children, so they have no personal time to manage their finances. Furthermore, nearly 60% of them have not sought help from a financial advisor
- 80% of parents agree they often ignore their own financial/retirement needs in order to provide the best for their children
- Nearly 90% of parents agree their expenditure on their children’s education and interests exceeds their retirement savings
- The post-90s generation is most confident about having sufficient savings to enjoy their desired retirement. However, they are the least motivated to manage their finances. Nearly 20% of post- 90s respondents have never checked their MPF accounts, a relatively high proportion compared to other age groups. In addition, only 41% of post-90s respondents have a clear retirement savings or investment plan
- 89% of respondents believe getting a loan is easier than earning or saving money these days and agree that they would choose instant enjoyment over planning for the future. The majority of respondents who agreed with this statement were those in the low income category
AIA Pension and Trustee Co. Ltd. (“AIA MPF”) today announced the findings of the AIA MPF Retirement Quotient Survey (the “Survey”) with Professor Chou Kee-Lee, Head of the Department of Asian and Policy Studies of The Hong Kong Institute of Education, who provided advice on developing the RQ. The Survey reveals that the RQ of Hong Kong’s working population is 63, on average. 30% of Hong Kong’s working population fails in RQ and will need to delay their retirement by 11 years due to inadequate retirement readiness.
AIA MPF conducted the Survey via online questionnaires and face-to-face interviews from 3 to 20 August 2015, engaging 1,110 respondents of the working population aged from 18 to 65 who possess at least one MPF account. To ensure the Survey was representative, survey data and responses were weighted against the demographics of Hong Kong’s working population, including age, gender and monthly personal income. The Survey was conducted by Cimigo, an independent market research company.
AIA MPF RQ comprises four key components: Goal Clarity and Future Time Orientation, Financial Knowledge, Trust in Institutions and Social Influence from Family and Friends. The Survey found that Hong Kong’s working population displays several unhealthy financial attitudes, which lead to low RQ.
Parents too busy with children to think about themselves, and have no trust in financial advisors
The Survey reveals that interviewed parents often neglect their own retirement needs as they are too busy taking care of their children. For instance: 1) “Parents do not have time to manage their finances nor trust financial advisors” – nearly 80% of parents agree that they are busy taking care of their children, leaving no personal time to manage their finances, and nearly 60% of them did not seek help from a financial advisor, 2) “Parents ignore their retirement needs as they are too focused on taking care of their children” – 80% of parents agree they often ignore their own financial/retirement needs in order to provide the best for their children. Also, nearly 90% of parents agree that expenditure on their children’s education and interests exceeds their own retirement savings. These circumstances can hinder the process of setting clear financial goals.
Over-optimistic young generation with low motivation to manage their finances
The Survey found the post-90s generation is the most confident about having enough savings to enjoy their desired retirement. However, they are the least motivated about managing their finances. For instance, 1) nearly 20% of respondents have never checked their MPF accounts, a relatively high proportion compared to other age groups; 2) only about 40% of respondents have a clear savings or investment plan; 3) less than 30% of respondents consult a financial advisor when making investment decisions or formulating a retirement plan.
In the post-90s group, a greater ratio of respondents with a high RQ (vs low RQ) agree with the statement, “The importance of saving is a lesson I have been taught in childhood”. This reflects that the younger generations are influenced by their parents about financial concepts and retirement preparedness.
Loans are trending: instant enjoyment over planning for retirement
Contemporary society has a strong consumerist culture. Loans encourage people to pursue instant enjoyment, rather than preparing for retirement. The Survey results indicated this phenomenon – 89% of respondents believe that getting a loan is easier than earning or saving money. 86% of respondents agree that most people would choose instant enjoyment over planning for the future. 93% of respondents who agree with this statement fall in the low income category, which had the highest positive response out of all income groups.
Professor Chou Kee-Lee, Head of Department of Asian and Policy Studies of The Hong Kong Institute of Education, remarked, “The young generation should not focus on instant enjoyment, but plan for the future. Citizens, regardless of their age, should get rid of the habit of spending future money and learn to spend within their means. They must avoid only making the minimum payment on their credit cards. Additionally, they should strengthen their financial knowledge, set a clear savings and financial goal and stick to their plan as early as possible to enjoy the benefits of compound interest.”
Mr Stephen Fung, Chief Executive Officer, AIA MPF, said, “With the problem of Hong Kong’s ageing population getting worse, retirement protection has become a heated topic. According to the RQ Survey, 3 out of every 10 people interviewed fail in RQ and will need to delay their retirement by 11 years. The Survey also reveals that parents cannot act as positive role models, which might have caused in the younger generation’s weak concept of finance. The active loan market adds fuel to the vicious cycle, and the public may overlook the importance of planning for retirement. We would like to remind parents not to neglect their own retirement needs while making an effort to provide the best for their children. They can consider establishing a separate account for savings or investment, and treat retirement savings as their first bill payment every month. By using autopay to arrange voluntary contributions, they can more efficiently build their retirement nest egg. Parents should also act as positive role models for their children to instil healthy financial habits so they learn the value of saving for a rainy day.”
Worrying results across 18 districts, 17 points gap between highest and lowest RQ
Moreover, the Survey investigated the retirement readiness of Hong Kong’s working population across 18 districts. The 3 districts with the highest RQ are Southern District (71.4), Central and Western District (70.1) and Yau Tsim Mong District (69), whereas the 3 districts with the lowest RQ are Sham Shui Po District (54.1), North District (59) and Tuen Mun District (61.3). A closer look at the four RQ components shows that the greatest difference lies in Goal Clarity and Future Time Orientation and Financial Knowledge between districts with the highest and lowest RQ. Citizens can take these into consideration to improve their RQ.