Christine FANGChief Executive, HKCSS

1 February 2007

Pension Policy Concerns 退休金政策的考慮

Two Main Focus

• Summary of Presentation at the Senior Officials Meeting– Pension Reforms & Pension Design in Ageing

Societies

• Longitudinal Study on Ageing for Policy Making– The Danish Longitudinal Future Study (DLFS)

– Survey of Health, Ageing & Retirement in Europe (SHARE)

Pension Reform in Ageing Societies

• Experience & Lessons• Social Pensions• Who’s going to pay• Working Longer

Experience & Lessons • Pension reform is an on-going objective-driven

process. • Administrative capacity is a pre-requisite for a

successful reform.• Emphasis on diversification of funding approaches

or multi-pillar systems.• Consider the harmonization of fragmented

schemes.• From Defined Benefits Defined Contribution

return first, unfunded & earning-related pillar.

Experience & Lessons

• Failure of pension systems resulted from – over-promising– manifest unfairness– low coverage– continuing high rates of poverty among the

elderly– hinder market mobility– conflict between generations

Experience & Lessons

• Pension reform objectives should include – Adequacy– Equity– Transparency– Affordability– sustainability

Social Pensions• Non-contributive pensions to reduce

poverty of older and vulnerable people• Challenges and opportunities of social

pension– Impact on poverty – Contribution to social protection– Universal vs Means-tested pension

Who’s Going to Pay• In any pension reform, there are 3 critical

elements– In line with the increases of life expectancy– Along with the labour market reform– Achieve both financial and social

sustainability

Who’s Going to Pay• Pension reforms involve changes in the

social contract – social solidarity and sharing of risk among government, employers, employees and different generations of workers and pensioners

• A threat of intergenerational conflict• Pension reform should not proceed in

isolation from other social security benefits. Social policy involves labour markets, social security and welfare

Working Longer

• Pension reform is increasingly focusing on extending working life.

• Three inter-dependent perspectives for extending working life– Public policy– Attitudes & expectation– Employer practice

Survey of Health, Ageing and Retirement In Europe (SHARE) 2004• A longitudinal survey with genuine multi-disciplinary &

cross-national design

Income security and personal wealth

Kinship and social networks, living arrangements

Physical and mental health, disability,

mortality

dynamic

longitudinal

The Danish Longitudinal Future Study (DLFS)

• A unique research study Initiated in 1985, has followed four generations of Danes, born in the 50’s, 40’s, 30’s and 20’s.

• Total of 1,380 respondents.• Study carried out in three waves: 1987, 1997,

2002.• Time span of the study (15 years) and the re-

interview the respondents, has provided us insights on how these people see their lives.

Subjects and Issues Covered• Identity and happiness• Fears of ageing• Work and retirement• Voluntary work and family• Loneliness• Housing• Finances

Main Findings in DLFS 1987,1997 & 2002

New generations, compared to previous ones, are:

• Better educated• Better off financially• Healthier and more active in retirement• More familiar with new information

technology

What Does This Mean? Megatrends:

• Being retired/older is becoming less of a trauma for many people – still more people answer “Age does not keep me from doing what I want to do” and “I look forward to being retired”

• Life after 60 is not that different to life before 60

• New opportunities to live, learn, develop, experience, after 60

Identity: Thinking of who I am…

• Most important for all generations: My family!! (75-90 %)

• Education not that important

• Career/work not very important, but more so for 40’s, 50’s

Happiness• General ranking of happiness factors, for all

generations: 1) Health2) Family life3) An optimistic view of life4) Love

• Money, work and sex not that important

• Health is increasingly important with age!

The Fears of Ageing• Deteriorating health, becoming fragile• Becoming dependent on help from

others• Lack of care• Loneliness• But note that 20 % answer: “No fears”

Work and Retirement• 2002 compared to 1997: More want/plan to

work longer• But half of the younger generations want

early retirement • Reasons for actual retirement:

- Health- To find time for other activities - Did not want to work any more- Couldn’t cope with job- Being fired

Work and Retirement• In 1987: 24% of 60-64 did PE/sports

• In 2002: 50% of 75-79 !! (same generation, 15 years older)

• Comparing 2002 to 1987: - twice as many are active in organisations- more go to church- more attend meetings, seminars- more take courses, educate themselves

Voluntary Work• The young-old generations: 40 % do

voluntary work• The oldest generation: 23 %• General opinions:• “Doing voluntary work is a good way to engage

oneself in retirement”• “Voluntary work is a vital supplement to the

public sector and public care”• “Voluntary work deserves more credit and

higher recognition”

Family• Most have good family relations

• A lot of mutual help going on inside families

• “Family” has increased its importance over the years

• The family, and the spouse very much so, is vital in providing security, comfort, care

• 79 % say: “I am certain my children or children-in-law will help me, if I need it”

Family and the Welfare State

• Most prefer the welfare state, rather than the family and friends, to provide care and help, if needed

• Family and friends seen as a supplement

Loneliness• Loneliness is much overrated….

- 75-85 % believe that “Many older persons in Denmark feel lonely”

• But only 10 % claim to “feel lonely from time to time” themselves

• There is no evidence that feelings of loneliness grow stronger with age

• Hence, “Becoming old and lonely” is a myth

• But a myth believed in by all generations, including older persons

Housing• Trend over time: More want to stay in present home• The older you are, the more you want to stay in your

present home• Other wishes:

- finding a smaller home- living close to natural surroundings (woods, beaches, etc.)- living close to shops, transport, etc.- living close to family and friends

Finances - Facts• Funded pensions will increase their

significance, but the state pension will continue to be an important financial foundation for the majority, and some 15 % do not save up for pensions

• Most in the new generations are not worried about finances in retirement, but are they too optimistic? Will they be as adaptive as previous pensioners?

Finances - Attitudes• Across generations: Agreeing that

pensioners are not generally well off, and that the least well-off should have their pensions increased

• e.g. strong cross-generational support for welfare system concerning pensions

• “It’s sensible to save for retirement”• “There is no reason to be a miser; spend the

money before it’s too late, and don’t worry about the children”

Pension Policy Concerns 退休金政策的考慮