Financial pressures on employees are pervasive. The latest edition of Willis Towers Watson’s Global Benefits Attitudes Survey (GBAS) showed that 43 percent of employees in Asia worry about their future financial state; and one in four say financial problems negatively impact their lives.
Developed economies such as Japan and South Korea are at the forefront of this challenge, although all countries are affected to some extent.
Further, Asian economies are grappling with ageing populations, which place government finances under strain while putting pressure on individual savings as an additional source of income in retirement. The impact is felt more in developed countries, which are at a more advanced stage of the demographic transition.
Across the region there is growing macroeconomic pressure brought on by volatility in global financial markets and the sluggish pace of economic growth.
As a result, many employees in Asia look ahead and see trouble on the horizon.
Employees in the region’s most developed countries such as Japan, South Korea, and Australia are not confident they will have the same good fortune as previous generations.
Nearly 75 percent feel the retirement and medical benefits covered by the state will not be as generous when they reach retirement. And just as many feel their generation will be worse off in retirement than their parents’ generation. Finally, less than half of employees in these countries are confident their retirement savings would be adequate should they face a prolonged retirement (25 years) (Figure 1).
While sentiment is more optimistic in emerging markets such as China, India, or the Philippines, there are trends that suggest the future is not so bright. For instance, there has been a rise of a middle class that cannot rely on social security to cover retirement adequately.
Other factors, including a rapid rise in life expectancy and changing family dynamics from traditional extended families to the modern nuclear family indicate that, in the future, there will be a larger financial burden on employees.
In these countries, the demographic trends are shifting to a larger ageing population, but employees do not feel as much of a need to save for, or delay, retirement (most employees expect to work until the age of 60 or earlier) as their developed market counterparts.
Earlier studies showed that employees in markets like India and China felt more compelled to save for life events such as their children’s marriage or buying homes than retirement.
Demographic and financial challenges that affect retirement have increased the burden faced by employees for their own long-term financial security. This includes building up sufficient…
By Willis Towers Watson