The 2009 HSBC Retirement Report is just out and shows that although most countries in the region currently have very high savings ratios, in excess of 20% of GDP. people generally don’t feel they are prepared for retirement.
These high savings rates potentially mask some significant risks because they are distributed very unevenly and often in savings vehicles which might not offer the best long-term returns. Pension assets are generally quite small – pension fund assets, for example, make up just 5% of India’s GDP. In China, the figure is just 1%.12 This compares with a global OECD average of 90%.
The study also shows that having high savings rates might not translate into sufficient retirement assets given the differing savings motives people may have.
The table below shows how it is only the traditional Asian Tiger economies which scored above the global average in terms of ‘approaching retirement’ as being a motive to save. In most emerging economies the desire to save for one’s children outweighs the need to save for one’s own retirement.