China: Less than half of young Chinese have started saving for retirement

| 21 Aug 2018

Only 44% of Chinese aged 18-34 have started saving for retirement, according to a survey report by Ant Fortune and US asset management firm Fidelity International.

The 2018 China Pension Outlook Survey Report stated millennials believe they need CNY1.63m ($236,000) to retire comfortably.

 Among young people who have not started saving, 40% plan to start at the age of 40. They also hope to retire at 57 — meaning they would have 17 years to achieve their saving goals.

However, young Chinese save an average of CNY1,339 per month, regardless of inflation and income changes, and based on the bank interest rate of 1.75%, it would take them about 60 years to save CNY1.63m.

More than half of Chinese millennials said they would expect to simply use cash savings and the government pension as their main sources of retirement income.

The findings are based on a survey of 28,440 respondents on the Ant Fortune platform, with 95% of respondents coming from China's first to fourth tier cities, and 75% being young people aged between 18-34. Ant Fortune is the wealth management app of Alibaba-affiliated Ant Financial Services.

Among all age groups, the survey found that the average retirement age is 58, and excluding investments, respondents think they need at least CNY1.82m in cash savings to retire.

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Overall, 54% of respondents said they had not started saving for retirement. According to the survey data, only 5% of the respondents believe that they will get support from their children in their retirement years.

In addition, 67% of respondents said they have little or no knowledge of pensions, and nearly one third have no retirement savings targets.

Strong reliance on the government-run basic pension and cash savings to fund retirement, and a lack of knowledge of retirement investment strategies, were found to be prevalent among millennials and non-millennials.

Asia Advisers Network is an initiative of Asia Insurance Review.