$8m 'ideal' savings for retirees

Hongkongers may need over HK$8 million on average to maintain an ideal retirement life, but there's a gap of 43 percent between actual savings and the target, a survey by the Bank of China (Hong Kong) has shown.

The bank polled almost 550 clients aged 18 to 60 from November to December last year, and found most respondents were of the view that they would need an average of HK$8.33 million to lead an "ideal" retired life.

Those falling in higher income groups would expect to save even more, as much as HK$12.15 million, for retirement.

Nonetheless, there was a shortfall of about HK$3.6 million in savings on average, the bank said.

The survey also found that 36 percent of the respondents already possess or consider buying qualifying deferred annuity policies, of whom 45 percent indicated a preference to buy QDAP through online channels.

Compared to an immediate annuity, a deferred annuity may be more suitable for the working population, as it allows policyholders to accumulate retirement savings by instalments when they are young and turn the savings into steady income after they retire.

QDAP is a kind of deferred annuity product certified by the Insurance Authority to enable premiums paid for such products to be eligible for tax deductions.

Annuities can be categorized as lifetime or fixed-term depending on whether the policyholders want the guaranteed income for the rest of their life after retirement or only for a specific period.

BOCHK head of insurance Daniel Li said the amount of premiums paid and number of applications made for BOC Life fixed-term deferred annuity plan through the bank's mobile banking services increased by 1.5 times and over 2 times last year.

Li said more people of younger age have also shown interest in annuities as about 40 percent of its clients are aged 40 or younger.

BOC Life has raised the guaranteed return for its fixed-term annuity products to a maximum of 3.3 percent amid the expectation that interest rates will remain higher for a while, said its chief marketing officer Ngai Chi-wai.

caroline.zheng@singtaonewscorp.com