New Retirement Preparedness Indicator highlights financial and economic factors influencing retirement readiness in Asia

New Retirement Preparedness Indicator highlights financial and economic 
factors influencing retirement readiness in Asia 
Research reveals varying degrees of retirement preparedness across Asia and 
points to the need for rapidly aging populations to mobilise private savings 
to shoulder some responsibility for retirement provision 
TORONTO, Nov. 14, 2012 /CNW/ - Manulife Asset Management has issued a report 
that introduces its Retirement Preparedness Indicator, which highlights the 
financial and economic conditions influencing the ability of individual 
economies to provision for their aging populations. The report covers 11 Asian 
countries and territories and finds that many face significant challenges to 
retirement financing at both the state and the individual levels. 
The report, entitled Funding the golden years: The financial and economic 
factors shaping retirement provision for Asia's rapidly aging populations, is 
part of Manulife Asset Management's Aging Asia research series and builds on 
the findings of its June 2012 publication: Saving up: The changing shape of 
retirement funding in a greying ASEAN. The previous publication revealed how 
ASEAN countries once considered to be among the most 'youthful' in Asia are 
actually aging more rapidly than most realise.  For a copy of the report, 
please contact bcarmichael@manulifeam.com. 
The new report divides the subject countries and territories into three broad 
categories of retirement preparedness. Those deemed to be facing the 'most 
favourable conditions' are Taiwan, Hong Kong and Japan, which are typified by 
high levels of financial wealth, high state pension coverage and 
well-developed financial markets. However, they also face some of the most 
dire demographic profiles and slowing economic growth prospects. Those judged 
to have 'favourable conditions' are Singapore, China, Malaysia and Thailand. 
With the exception of Singapore, these countries tend to have lower levels of 
financial wealth and state pension coverage but have high savings rates, 
robust economic growth potential and relatively positive demographic profiles. 
Those deemed to be facing 'challenging conditions' are Indonesia, South Korea, 
Vietnam and the Philippines. Except for South Korea, these countries generally 
have very low levels of government pension coverage, the lowest levels of 
financial wealth and shallow financial markets. On the other hand, they are 
likely to see income and savings rates rise and enjoy relatively favourable 
demographic profiles. What differentiates South Korea from this group is that 
it faces the twin challenges of a rapidly growing elderly population and 
rapidly declining elder support ratio. However, its relatively high financial 
wealth and high savings rate work in its favour. 
The report reveals that it is ultimately the interplay between demographic, 
financial and economic factors that will determine whether or not Asian 
countries and territories will become rich enough to sufficiently fund 
retirements before they become too old. 
Oscar Gonzalez, economist at Manulife Asset Management, pointed out that: 
"While countries facing 'favourable conditions' and 'challenging conditions' 
tend to have lower levels of accumulated wealth, factors such as relatively 
positive economic outlooks and high savings rates work in their favour. For 
example, China is expected to see per capita real GDP growth of 6% per annum 
between 2011 and 2050. Despite its demographic challenges, this robust growth, 
combined with a historical savings rate of 47%, implies that individuals in 
China are still well positioned to contribute to financing their own 
retirements if appropriate savings vehicles and incentives are available." 
Gonzalez added "In many of the countries facing 'challenging conditions', the 
positive impact of robust GDP growth and high savings trends will be amplified 
by relatively attractive demographic profiles. Working age populations in 
Indonesia, the Philippines and Vietnam are expected to continue to account for 
about 60% of the total populations through 2050. This means that retirement 
preparedness in these economies will likely be enhanced by the addition of 
significant numbers of new savers over the coming decades." 
Michael Dommermuth, president of Manulife Asset Management Asia, commented on 
the report's conclusions: "Asia as a whole is aging much more rapidly than 
most realise and individual countries and territories face varying conditions 
that affect their abilities to provide for their growing retired populations. 
With mandatory pension plan coverage below 50% in the majority of the 
economies we studied, this report reveals that most public retirement schemes 
in the region will need to be supplemented. The ability to do so hinges on the 
availability of secure savings vehicles that unlock the potential to grow 
personal savings. In a region with historically high savings rates, this is 
strongly influenced by government policy support for enhancing financial 
market depth and the level of private sector interest in alternative savings 
mechanisms such as mutual funds and investment-linked insurance products." 
The report points out that Asia is likely to experience an increased shift in 
responsibility for retirement funding from the state to the individual. As 
this shift takes place, Dommermuth anticipates a growing need for investment 
products such as asset allocation funds that help build pension pots and, 
ultimately, income generating products that generate steady cash flow in 
retirement. 
Manulife Asset Management has considerable experience building multi-asset 
solutions designed to meet specific client objectives and constraints. Its 
dedicated asset management unit, the Portfolio Solutions Group, has investment 
professionals across the U.S., Canada and Asia managing more than US$90 
billion in asset allocation funds, making Manulife Asset Management one of the 
world's leading asset management firms. 
Dommermuth concluded: "Based on market knowledge gleaned from our footprint 
across 10 countries and territories in Asia, we know how to provide customised 
investment solutions that meet local market needs. This is why, when it comes 
to retirement solutions, Manulife has launched mutual funds and participates 
in the pension business in Hong Kong, issued fixed annuity insurance products 
in Japan and launched investment-linked plans that provide a regular income 
stream in Singapore, for example. We are also proud to have been selected as a 
provider for Malaysia's Private Retirement Scheme, which is one example of 
pension provision reform that has already been put in place." 
Notes to editors: 
1) How is the Manulife Asset Management Retirement Preparedness Indicator 
calculated? 
The Manulife Asset Management Retirement Preparedness Indicator is composed of 
financial and macroeconomic components that together describe the environment 
facing pensioners within 11 countries and territories in Asia. 
The financial component (70% of the overall indicator) looks at vital factors 
such as a country or territory's financial wealth, coverage ratio, average 
income, sovereign bond default rate and net pension wealth. It seeks to 
quantify the conditions that affect both a state's ability to provide for its 
prospective pensioners and an individual's ability to bear some of the 
responsibility for their own pension provision. 
The macroeconomic component (30% of the overall indicator) quantifies the 
'bigger picture' factors which will weigh on both states and individuals in 
the years to come, but which are largely beyond the influence of private 
citizens. These include support ratios (i.e., the proportion of working age 
people relative to retirees), gross national savings and forecasted GDP per 
capita growth rates. 
2) Net pension wealth is defined as the size of the lump sum that would be 
needed to buy the flow of pension payments, net of personal taxes and social 
security contributions, promised by the pension system in an economy. (Source: 
OECD Asia/Pacific 2011) 
3) What percentage of the populations of the 11 countries and territories 
analysed are covered by government-mandated pension plans? 
        Coverage ratio 
Japan       75% 
Taiwan      70% 
Hong Kong   56% 
Singapore   45% 
Korea       40% 
Malaysia    33% 
Thailand    21% 
China       17% 
Philippines 14% 
Indonesia   11% 
Vietnam     11% 
Note: Coverage ratio = percentage of population covered by mandatory plan 
4) What are the historical gross national savings rates of the 11 countries 
and territories analysed? 
        Gross national savings* 
China       47% 
Singapore   42% 
Malaysia    35% 
Vietnam     32% 
Korea       32% 
Hong Kong   31% 
Taiwan      29% 
Thailand    29% 
Indonesia   28% 
Japan       25% 
Philippines 22% 
Note: * Average 2000-2011 gross national savings as a % of GDP Source: 
National Statistics Offices & Global Insight 
About Manulife Asset Management 
Manulife Asset Management is the global asset management arm of Manulife 
Financial. Manulife Asset Management provides comprehensive asset management 
solutions for institutional investors and investment funds in key markets 
around the world. Manulife Asset Management also provides investment 
management services to affiliates' retail clients through product offerings of 
Manulife and John Hancock. This investment expertise extends across a broad 
range of asset classes including equity, fixed income and alternative 
investments such as real estate, timber, farmland, as well as asset allocation 
strategies. 
Manulife Asset Management has investment presence in the United States, 
Canada, the United Kingdom, Japan, Hong Kong, Singapore, Taiwan, Indonesia, 
Thailand, Vietnam, Malaysia and the Philippines. In addition, it has a joint 
venture asset management business in China, Manulife TEDA. It also has 
operations in Australia, New Zealand, Brazil and Uruguay. John Hancock Asset 
Management, Hancock Natural Resource Group and Declaration Management and 
Research are units of Manulife Asset Management. 
Manulife Asset Management was named Best Asian Bond House for 2011 by Asia 
Asset Management. As at 30 September 2012, assets under management were US$228 
billion. Additional information about Manulife Asset Management can be found 
at ManulifeAM.com. 
About Manulife Financial 
Manulife Financial is a leading Canada-based financial services group with 
principal operations in Asia, Canada and the United States. In 2012, we 
celebrate 125 years of providing clients strong, reliable, trustworthy and 
forward-thinking solutions for their most significant financial decisions. Our 
international network of employees, agents and distribution partners offers 
financial protection and wealth management products and services to millions 
of clients. We also provide asset management services to institutional 
customers. Funds under management by Manulife Financial and its subsidiaries 
were C$515 billion (US$523 billion) as at 30 September 2012. The Company 
operates as Manulife Financial in Canada and Asia and primarily as John 
Hancock in the United States. 
Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and 
under '945' on the SEHK. Manulife Financial can be found on the Internet at 
manulife.com. 
Brian Carmichael, Manulife Asset Management, +1-617-663-4748, 
bcarmichael@manulifeam.com, or Ginie Lam, Manulife Asset Management (Asia) 
Ltd., +852 2202 1965, ginie_yn_lam@manulifeam.com 
http://www.manulife.com 
SOURCE: Manulife Asset Management 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/14/c8105.html 
CO: Manulife Asset Management
ST: Ontario
NI: FIN ECO  
-0- Nov/14/2012 18:23 GMT