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Dec 11, 2010
S'poreans' top goal: Saving for retirement

But 69% feel they are not saving enough, or don't save at all: Poll
By Lorna Tan, Senior Correspondent

THE strong economy has sent saving for retirement to the top of Singaporeans' wish list, overtaking the main objective six months ago - saving for emergencies.

Singapore also has the highest percentage of people aspiring to save for retirement, compared with the numbers in other Asian economies.

These were the findings of a biannual survey by HSBC, which polled 3,584 people from Singapore, Malaysia, Taiwan, South Korea, India, China and Hong Kong in July and August. Of those polled, 506 were Singaporeans.

The HSBC Asian Insurance Monitor showed that 67 per cent of Singaporeans plan to save for retirement, with 64 per cent intending to put cash away for emergencies.

There is much to be done, however, as 69 per cent feel they are saving less than what they need to, or do not have savings at all.

Singaporeans are not alone. HSBC Insurance (Singapore) chief executive Walter de Oude noted that the general sentiment that one's savings are insufficient to meet one's needs is consistent across Asia.

However, when asked what they planned to do to their savings in the next six months, only 41 per cent of Singaporeans said they planned to increase them, while 47 per cent intended to maintain their current level of savings.

This was in contrast with some Asian economies, which had a larger proportion of people who wanted to increase their savings. In Hong Kong, 67 per cent wanted to boost their nest eggs, while 61 per cent felt the same in India.

Mr Patrick Lim, associate director at financial advisory company PromiseLand Independent, emphasised that it is important to start planning early.

'The shorter the time horizon, the harder it will be to reach your retirement goals. Most people tend to start planning later, partly because they are complacent and possess a false sense of security in the mandatory retirement scheme here,' he said.

That could be seen in the survey, which found that 41 per cent expect to rely on the Central Provident Fund (CPF) scheme.

When it comes to the top financial worries, unexpected medical expenses top the list across Asia. In Singapore, this is followed by the sudden loss of a job and insufficient retirement funds.

Another survey finding is that Singaporeans, like most Asians, still depend on traditional savings plans to prepare for retirement.

Survey respondents here said saving plans are their top source of retirement funds, followed by cash or deposits, CPF and retirement income products.

Mr de Oude noted that the top saving method preferred by Singaporeans is through a disciplined instalment plan, while 27 per cent wanted to maintain a conservative investment approach.

'This is all well and good, but by relying largely on savings and investments, people run the risk of saving short term to fund their long-term dreams,' he cautioned.

He added that people need to build on their regular savings habit and choose products that have a range of funds that allow them to diversify, maximise growth and which are priced to cover the longer term.

One way of doing this is to invest in an annuity-type product, which provides a stream of income for life.

However, consumer Doris Tan, 45, who has been on the lookout for suitable retirement products, laments the lack of good ones here.

'There are only a few annuity products in the market, and the payouts are not attractive,' she said.

Since the introduction of national annuity scheme CPF Life, new annuity sales have declined. In the first nine months of this year, the amount totalled $101 million, down from $153 million in the corresponding period last year and $513 million in the same timeframe in 2008.

The survey also showed that 73 per cent of Singaporeans had indicated they would cut back on saving for retirement funds in the event of salary cuts.

This is a concern, said Mr de Oude, adding that saving for retirement is like running a marathon: slow and steady.

'We should not be distracted by short-term situations and compromise savings for our retirement aspirations in the long run. Lost time can never be made up,' he warned.


Key findings

What Singapore respondents say in the HSBC Asian Insurance Monitor survey:

67 per cent say retirement is their top savings goal

46 per cent aspire to pursue a meaningful, enjoyable retirement

31 per cent are saving for early retirement

69 per cent do not save enough

66 per cent say their top financial worry is unexpected medical expenses

67 per cent say savings plans are a top source of retirement funds

Top three financial products owned are medical insurance (63 per cent), life insurance (52 per cent), cash/deposits (50 per cent)

8 per cent own a retirement income product

20 per cent plan to buy a retirement product in six months

73 per cent will reduce retirement savings if subject to pay cuts