#1GAI Global Aging Institute From Challenge to Opportunity Wave 2 of the East Asia Retirement Survey Richard Jackson President Global Aging Institute University of Indonesia Jakarta September 2, 2015 Gap.GlobalAgingInstitute.org#2回 回 回 回 回 Survey Framework The East Asia Retirement Survey is now in its second wave. The first wave was conducted in 2011 in China, Hong Kong SAR, Malaysia, Singapore, South Korea, and Taiwan. The second wave was conducted in 2014 in the six first-wave countries plus Indonesia, the Philippines, Thailand, and Vietnam. The survey is nationally representative, except that the samples for China, Indonesia, the Philippines, Thailand, and Vietnam were limited to urban areas. The survey universe consists of "main earners" aged 20 and over, including both current main and retired main earners. Respondents were asked about their general attitudes toward retirement, as well as about their own retirement experience and expectations. Current retirees were asked about their current retirement experience, while current workers were asked about their retirement expectations. GAI Global Aging Institute 2#3GAI Global Aging Institute The Future of Retirement in Indonesia 3#4Thailand By overwhelming majorities, East Asians reject the traditional model of family-centered retirement security. "Who, ideally, should be mostly responsible for providing income to retired people?" and "Who, ideally, should be mostly responsible for providing personal care to retired people?" 70% Share of Respondents Saying "Grown Children or Other Family Members" 60% | Income Personal Care 50% 48% 40% 34% 32% 29% 30% 30% 26% 21% 20% 20% 13% 10% 10% 11% 11% 10% 8% 10% 8% 6% 6% 0% Hong Kong Malaysia GAI Global Aging Institute South Korea Taiwan Indonesia Singapore China Philippines Vietnam 4 63% 60%#545% Looking to the future, today's workers expect to be less dependent on the family than today's retirees are. Share of Today's Retirees Who Are and Share of Today's Workers Who Expect 16% China Taiwan South Korea 40% Today's Retirees Today's Workers 35% 30% 25% 20% 15% 14% 12% 9% 10% 6% 6% 6% 5% 0% 37% 40% 25% 27% 29% 32% 17% 20% 21% GAI Global Aging Institute Malaysia Indonesia Vietnam Singapore Thailand Hong Kong Philippines 16% 14% 12% 10% от 5#6Views differ greatly across East Asia about who should replace the family as guarantor of retirement security. "Who, ideally, should be mostly responsible for providing income to retired people?" Share of Respondents Saying "Retirees Themselves, through Their Own Savings" versus Share Saying "Government" 70% 61% 60% Retirees Themselves Government 50% 48% 44% 40% 40% 41% 43% 45% 30% 30% 23% 20% 10% 0% South Korea GAI Global Aging Institute Singapore Taiwan Hong Kong Malaysia Indonesia 36% 34% 22% 18% Vietnam 66% 66% 62% 63% 18% 9% 10% China Philippines Thailand 6#7Indonesians are divided about the role of government, employers, and individuals in providing retirement income. "Who, ideally, should be mostly responsible for providing income to retired people?" Share of Indonesian Respondents Saying... 50% 45% 45% 40% 35% 30% 25% 25% 20% 18% 15% 11% 10% 5% 0% Government Former Employers Retirees Themselves Grown Children GAI Global Aging Institute 7#8Most Indonesians are anxious about their retirement security, and with good reason. Share of Today's Retirees and Share of Today's Workers in Indonesia Who Worry about Each of the Following Things Happening during Retirement... 100% Today's Retirees Today's Workers 87% 89% 90% 85% 82% 83% 80% 79% 80% 75% 70% 60% 50% 40% 30% 20% 10% 0% Being in poor health Being a burden on their and having no one to care for them children GAI Global Aging Institute Exhausting their savings Being poor and in need of money 8#9While state pension receipt is expected to rise in most East Asian countries, in Indonesia it is expected to fall. Share of Today's Retirees Receiving and Share of Today's Workers Expecting to Receive Income from the State Pension System Today's Retirees Today's Workers 100% 90% 80% 68% 68% 68% 70% 60% 61% 59% 60% 55% 54% 49% 50% 45% 44% 40% 30% 20% 10% 0% Indonesia GAI Vietnam Global Aging Institute Thailand Taiwan 95% 91% 89% 89% 86% 83% 79% 65% 55% Philippines South Korea Malaysia Singapore Hong Kong China 9#10Very few Indonesians can count on asset income in retirement. Share of Today's Retirees Receiving Income and Share of Today's Workers Expecting to Receive Income from Financial Assets* 90% 80% Today's Retirees Today's Workers 70% 63% 60% 60% 50% 40% 30% 20% 18% 18% 19% 13% 11% 10% 3% 8% 0% Philippines Indonesia GAI Global Aging Institute Vietnam South Korea China 77% 73% 74% 68% 60% 50% 51% 48% 41% 42% 42% Hong Kong * Includes insurance and annuity policies and stocks, bonds, and mutual funds, but excludes bank deposits. Malaysia Thailand Taiwan Singapore 10 10#11Indonesia's early retirement ages complicate the challenge of ensuring retirement security. Share of Today's Retirees Who Retired at Age 60 or Later and Share of Today's Workers Expecting to Retire at Age 60 or Later 80% 75% 76% Today's Retirees Today's Workers* 71% 71% 70% 65% 60% 60% 60% 56% 50% 51% 49% 50% 40% 33% 39% 32% 34% 28% 30% 29% 20% 20% 14% 10% 8% 0% Malaysia China Indonesia * Includes workers who never intend to retire. GAI Global Aging Institute Vietnam Taiwan Singapore Thailand Philippines Hong Kong South Korea 11#12GAI Strategic Implications Global Aging Institute 12#13What Indonesians Think About Retirement Reform Share of Indonesian Respondents Saying That Government Should or Should Not ... Should Not Should 100% 10% 90% 19% 80% 38% 47% 46% 70% 68% 60% 50% 90% 40% 81% 30% 62% 53% 54% 20% 32% 10% 0% Increase taxes to provide a basic Require employers to pension benefit to offer more jobs to those elderly who are in financial need the elderly Require workers to contribute more to pay for government pension programs Raise the retirement age Encourage workers to save more for retirement Require workers to save more for retirement GAI Global Aging Institute 13#14◉ 回 Directions for Reform Improve the adequacy of state pension systems Encourage or require workers to save more for their own retirement Share of Today's Workers Who Do Not Expect to Receive a State Pension Benefit China 5% Hong Kong 9% Singapore 11% Malaysia 11% South Korea 14% Establish more robust floors Philippines 32% of old-age poverty Taiwan 32% protection Thailand 41% Vietnam 51% Raise retirement ages and Indonesia 55% encourage longer work lives 0% 10% 20% 30% 40% 50% 60% 回 回 GAI Global Aging Institute 14#15There is widespread demand for translating lump-sum pension payments into retirement income streams. "If you could choose how pension benefits will be paid to you, please indicate which of the following ways you would prefer to receive the benefits." Share of Today's Workers Saying "All in Regular Monthly Payments" versus Share Saying "All in a Single Lump Sum" 90% 80% All in Monthly Payments 70% All in a Lump Sum 60% 50% 52% 53% 44% 45% 45% 38% 40% 30% 25% 19% 20% 10% 0% Singapore Indonesia 19% 18% 19% 14% 11% 7% GAI Global Aging Institute Thailand Hong Kong Malaysia Vietnam Taiwan China Philippines South Korea 78% 69% 59% 62% 7% 7% 15#16回 回 Directions for Reform Improve the adequacy of state pension systems Encourage or require Share of Respondents Saying "Require Workers to Contribute More to Pay for Government Pension Programs" versus Share Saying "Require Workers to Save More for Their Own Retirement" | Contribute More workers to save more for Save More 100% their own retirement 90% 88% 89% 90% 90% 90% 82% 80% 72% 77% 83% 85% 77% 85% 70% 64% 64' 回 Establish more robust floors 60% 52% of old-age poverty 50% 40% protection 30% 20% 10% 回 Raise retirement ages encourage longer work lives and 0% GAI Global Aging Institute China Thailand Philippines South Korea Taiwan Vietnam Indonesia Singapore Malaysia Hong Kong 68% 68% 57% 54% 30% 16#17Although Indonesians have a low level of market-orientation, they have a high level of trust in the financial services industry. Share of Respondents Agreeing and Disagreeing That "People Can Trust Financial Services Companies to Help Them Prepare for Retirement" 70% 63% 59% 60% 50% 40% 30% 20% 12% 8% 10% 0% Thailand Indonesia GAI Global Aging Institute Agree Disagree 50% 45% 43% 42% 41% 38% 32% 29% 30% 29% 30% 29% 27% 19% Malaysia Philippines Vietnam Singapore China Taiwan South Korea 16% Note: This question used a five-point scale, with 1 being strongly disagree and 5 being strongly agree. "Agree" = 4 + 5 and "Disagree" = 1 + 2. Hong Kong 17 50%#18回 ◉ Directions for Reform Improve the adequacy of state pension systems Encourage or require workers to save more for their own retirement Establish more robust floors of old-age poverty protection Raise retirement ages and encourage longer work lives Share of Respondents Saying Government "Should Increase Taxes to Provide a Basic Pension Benefit to Those Elderly Who Are in Financial Need" Vietnam Indonesia Philippines Singapore Malaysia Thailand Hong Kong Taiwan China South Korea 27% 32% 43% 60% 61% 67% 69% 72% 74% 75% 回 回 GAI Global Aging Institute 0% 10% 20% 30% 40% 50% 60% 70% 80% 18#19◉ Directions for Reform Improve the adequacy of state pension systems Share of Respondents Saying Government Should Raise the Retirement Age ◉ Philippines 23% Encourage or require China 38% workers to save more for Taiwan 40% their own retirement Vietnam 43% Malaysia 53% Establish more robust floors of old-age poverty Singapore 54% Thailand 60% protection Indonesia 62% Hong Kong 68% Raise retirement ages and encourage longer work lives South Korea 83% 0% 20% 40% 60% 80% 100% 回 回 GAI Global Aging Institute 19#20GLOBAL AGING INSTITUTE Gap.GlobalAging Institute.org GAI Global Aging Institute 20 20