Indonesians are dream team of Asian pensions

Indonesians are dream team of Asian pensions

SINGAPORE (Reuters): A quarter of Indonesians feel they would need over US$5 million to retire comfortably -- a huge nest-egg not even contemplated in Asia's biggest economy, Japan, according to a survey released on Thursday.

MasterCard International's Asian Ideals survey showed up the bizarre discrepancy, finding that in Indonesia, one of Asia's sickest economies, about 26 percent wanted over $5 million.

By contrast, no one surveyed in Japan felt they needed such a sum. In Indonesia's rich neighbor, Singapore, only 12 percent thought they needed over $5 million to survive after retirement.

Indonesians' inflated expectations stem probably from their country's economic crisis, which has led some once-wealthy individuals to overestimate the cash pile needed for retirement, a senior executive of an Indonesian life office said.

Poor Indonesians, too, now may have higher expectations, said PT Prudential BancBali Life Assurance chief Shelton Chellappah.

With 120 million out of Indonesia's 200 million people expected to be living on less than $1 a day by the end of this year, many aspire to close the gap on their richer countrymen, some of whom still rank among the world's wealthiest, he said.

"These factors make expectation levels much higher than you would normally see," Chellappah told Reuters.

The survey questioned 5,386 consumers over 18 years of age in 13 countries: Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan and Thailand.

"What is interesting about this survey is the comparison between markets and how much money consumers think they need to guarantee a comfortable retirement," Jonathan Gould, MasterCard's senior vice-president, marketing in Asia Pacific, told Reuters.

In Singapore, a high cost of living fuels expectations, as does increasing awareness of its rapidly changing demographics.

"The population in Singapore is the fastest aging in the world outside of Japan and that's a frightening statistic," Bill Beaty, senior vice-president and general manager of American International Assurance in Singapore.

Expectations are more measured elsewhere in the region.

Roughly a third of respondents in India, China and Thailand could retire on less than $100,000, while $100,000 to $300,000 would be enough for a quarter of all those surveyed.

Asians also want to be youthful in their twilight years.

Between 50 and 55 was the most popular retirement age for Malaysians, Indonesians and Thais, with Filipinos, Indians and Chinese respondents preferring 56 to 60.

But some people do not plan to retire at all. About 30 percent of those surveyed in Hong Kong and 19 percent of those in Taiwan said they would not stop working.

The survey showed 63 percent of all those polled did not expect their families to be responsible for funding their retirement. Such support is a tradition in many Asian societies.

"That was something of a surprise, but I think the number reflects the rising affluence of Asians and is not necessarily showing a breakdown in traditional family values," Gould said.

Two thirds of all respondents had a pension plan and awareness of retirement needs was growing, insurers say.

"If you are worried about putting food on the table and clothes on your back you are not thinking of pensions, but growing affluence is raising awareness," Lorenzo Chan, executive vice-president of Allianz Pioneer Life in the Philippines said.

The region's economic turmoil had also boosted pensions.

"If anything, the Asian crisis has made people more aware of investment risks and the need to plan properly for the future," said Malcom Arney, president of John Hancock Life, Singapore.