The overwhelming conclusion of the survey is that, in the context of employee benefits, people want more help in the area of retirement, especially those over the age of 40 or those with a monthly income of over HK$16,000.
More than half of the survey participants think they are not saving enough for retirement
The survey found that 63% of those who responded believe that their current rate of retirement savings is lower than it should be. On average, respondents think their ideal retirement savings rate should be 16% of their income, but their actual savings rate is only 11%. When one considers that the mandatory MPF contributions are 10% of earnings (5% each for the employee and the employer respectively), it means that people are saving only a very small additional amount beyond the minimum.
Moreover, employees with lower incomes tend to have a lower retirement savings rate as a larger proportion of their income is spent on daily necessities, with little left over for saving. Conversely, higher-income employees (with a monthly income of HK$45,000 or more) believe they should be saving at a rate of 20% of earnings on average. However, in practice their actual rate of savings also falls short of expectations, being closer to 16%.
Financially disadvantaged employees are more likely to extend their retirement age
When employees feel they are behind in terms of saving for retirement, they may consider working longer and extending their retirement age. This can help in two ways. First, retiring later means that you have more time to save for retirement. Second, it shortens the period of "no income" over which your retirement savings need to last. In terms of survey findings, most respondents said they expect to retire at or before age 65, with 15% expecting to work to age 70 or beyond. This number increases to 23% for respondents who have not saved sufficiently and are therefore in a worse financial position.
Younger employees have a longer period over which to plan for retirement and so their expectations for retirement age are significantly more optimistic, with more than half expecting to retire before age 65. However, the fact that the savings rate for most employees falls short of expectations means that many eventually have to work longer and extend their retirement age.
Use financial programs to make retirement arrangements more suitable for employees
The survey also found that only 8% of respondents use a financial app to track their retirement savings. Of this relatively small group, about two-thirds of regular app users believe that their retirement plans are sufficient and “meet their needs”. This number falls to about one-third for those respondents who do not use a financial app. It is reasonable to conclude that those who use an app to actively track the status of their retirement savings, making adjustments as needed, stand a much better chance of achieving their retirement savings objectives.
As for employers, apart from increasing contribution rates, they can help their employees in the area of retirement and investment education by engaging with MPF providers, consultants or intermediaries, etc., often as a part of a broader wellbeing initiative. Some MPF providers and the MPFA have already been working hard to develop education material to help savers plan and make better informed decisions. Given the wider availability of savings related information and support, people should now be able to plan better for their retirement according to their circumstances.
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