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Young Chinese prioritize career development over retirement saving

China, August 5, 2014

Aegon has published the results of its 2014 Aegon Retirement Readiness Survey for China. The report highlights that many Chinese have high expectations for their retirement, but preparations for retirement aren't in line.

Published together with the China Center for Insurance and the Tsinghua School of Economics (SEM) and Management, AEGON-CNOOC's report showed that 80% of respondents were aware of their personal responsibility toward their retirement income.

This is a considerable step forward. Until very recently, many Chinese people nearing retirement age firmly believed that the government or employers should provide for them in their old age.

Young and middle-aged adults born in the 1970s or 1980s, ranked low in terms of their expectations and awareness of retirement, as well as their attitudes towards it. They also showed a weaker capability for understanding financial issues, an absence of sound plans for retirement and insufficient savings.

The author of the report, Professor Chen Bingzheng, from Tsinghua SEM said: "The higher the age, the better prepared they are for retirement. Compared with those aged over 55, the 25-55 age group are less prepared. Around 53% of respondents indicated that they don't regularly save money for their retirement – a number that is significantly higher for young and middle-aged adults."

Lack of time due to career development

People from young and particularly the middle-aged groups, who are at the peak of their careers and regard career development as a top priority in life, believe they are not saving sufficient for retirement because they simply do not have the time to plan it. This is especially true with those aged 35-39, known as the late-'70s generation.

AEGON-CNOOC's President and CEO, Jason Ma, said: "For Chinese citizens, especially those aged 25 to 55, it is advisable to participate in retirement plans offered by their employers – even if they are covered by a basic social pension offered by the government. On top of this, they should also try to finance their retirement by other means such as via retirement savings, financial products and commercial pensions.

Professor Chen noted that 72% of respondents now participated in a social pension, an increase of 10% over last year. He suggests, however, that building a moderately well-off society requires a higher awareness of planning for retirement.

The government should develop better social security measures and policies, educating citizens on wealth management; employers should provide employees with better retirement services and information as well as flexible retirement programs such as retraining or part-time jobs; and financial institutions should launch more reasonable old-age security products.

Retired population set to increase from 10% to 35%

Over the next 40 years, the number of Chinese people aged 65 or over is estimated to increase from around 10% to 35% of the population. Population aging has become an unavoidable challenge that affects everyone in China.

Professor Chen concludes: "The only effective way to solve these issues and to guarantee that the elderly will be, properly looked after and enjoy retirement, is by pooling knowledge from multiple sources."

Written by: Aegon