Awareness of retirement planning improves in China, more attention needed on post-retirement financial sustainability, Fidelity International survey says

Shanghai, 15 November 2022: Fidelity International and Ant Fortune today released the 2022 China Readiness Survey1. The results show that with the unveiling of China's third pillar private pension framework earlier this year, respondents' awareness and behaviors towards retirement planning continue to improve. However, as the focus of this year's survey turns to post-retirement decumulation, it indicates that people have not treated retirement planning as a continuous process throughout the entire lifecycle, and do not have enough post-retirement investment knowledge.

Awareness of retirement planning improves

With the accelerated development of China's third-pillar pension, the average age at which respondents started saving for retirement saw a significant change from 38 to 35 years old. On average, the proportion of retirement savings accounts for 27% of respondents' income, which has seen an upward trend over three consecutive years.

Chinese citizens are gradually changing their mentality from saving for retirement to investing for retirement. The percentage of respondents who agree with the concept of long-term investment and consider it as their preferred investment option for retirement has increased from 10% last year to 15%.

Retirement is not the end

Retirement investment is an ongoing process which covers an entire lifetime. The survey shows that people have a better understanding of pre-retirement planning, but post-retirement investment is still a relatively new area for most people.

Over half of the respondents said they had limited knowledge about how to invest after retirement. Nearly 60% of respondents said they would rely on basic state pensions and cash as their primary source of income in post-retirement, with only a minority choosing to continue to invest actively.

Enhance post-retirement financial sustainability

Fidelity International and the Ant Fortune platform have conducted the China Retirement Readiness Survey for five consecutive years. In past years, lack of income and high expenses have been the biggest obstacles to retirement savings for respondents, and half of this year's respondents still agree on this. It remains indispensable to enhance awareness of retirement planning through system design, tax incentives and investor education, to encourage people, especially younger generations, to continuously contribute to their pension pot, which is the foundation for a comfortable retirement life. 

This year's report has begun a focus on post-retirement drawdown and reinvestment. Five years since the first survey, there has been no fundamental shift in terms of respondents using state pensions and cash as their primary source of post-retirement income, and the importance of staying invested after retirement has not yet been fully appreciated. However, 37% of respondents who have already held target-date funds (TDFs) said they are still willing to do so after retirement.

Helen Huang, Managing Director of Fidelity International, China, said: "With the flourishing development of China's third-pillar pension, we are delighted to see that awareness of retirement savings has been improving year by year. We also shared an important concept in this year's report – post-retirement financial sustainability - through which we hope to remind investors that retirement is the start of a new life stage, and that they should regard retirement investment as an ongoing process for their whole life. Financial institutions ought to provide solutions that cater to the needs of different age groups, including retirees.”

“We are quite optimistic about the development and opportunities in the third pillar pension in China. As a professional and leading company in the global pension space, we will continue to promote and deepen investor education riding on our new retirement brand to be launched in China. Together with our long-term commitment and advanced product offerings in the future, we aim to help Chinese citizens plan and prepare for retirement throughout their different life stages, and to achieve financial well-being and a happy life."

Guoming Zu, General Manager, Financial Institution Strategic Cooperation, Ant Group, said, "Ant Fortune and Fidelity have cooperated on the China Retirement Readiness Survey and doubled down on investor education efforts in the past five years. With the further improvement of the pension system in China, we look forward to continuing working with industry partners to promote deeper investor education on retirement planning in the long term by means of various approaches, making it inclusive and beneficial for a broader group of people in China."

¹ China Retirement Readiness Survey has polled more than 170,000 respondents cumulatively between 2018 and 2022, with over 10,000 respondents in 2022.

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