IEC Submits Responses for the Public Engagement Exercise on Retirement Protection
21 June 2016
The Investor Education Centre (IEC) has responded to the Commission on Poverty (CoP) regarding the consultation paper on retirement protection.
In its response, the IEC underscored the importance for individuals to have a certain level of financial literacy to make informed financial decisions for retirement throughout their working life.
"The retirement protection system spells out the roles of different pillars in serving elderly groups during their retirement," said Mr David Kneebone, General Manager of the IEC. "However the system alone is not sufficient to protect people against the risk of poverty in old age."
"Most of us hope to enjoy financial freedom and lead a more leisurely life when we retire. We advocate for a thorough financial education programme regarding how to prepare for one's retirement on top of education of the different pillars," he added.
The IEC recommended that the retirement protection system takes into consideration the need for individuals to have a holistic understanding of retirement planning and to possess the corresponding financial knowledge to plan for their retirement.
Highlights of the IEC's submission include:
- Vast majority of the population lack the skills and knowledge to plan or their retirement. IEC research (Note 1) indicating that setting retirement as a financial goal was not among the top priorities for most Hong Kong people until they were close to retirement.
- Financial education initiatives on retirement planning in Hong Kong are still lacking. An IEC study shows that only 13% of 661 financial education initiatives featured retirement planning, with key elements in a retirement plan such as MPF, insurance and investment mostly being offered separately by financial institutions.
- Financial education for retirement planning should span throughout life and start as soon as possible and ideally tailored and made relevant to the audiences' specific knowledge and experiences.
- A holistic public policy on retirement is required to oversee the specific needs of those planning for retirement and retirees.
- Financial education on the individual pillars in the retirement protection system with specific focus is needed.
- As the Secretariat for the Hong Kong Strategy for Financial Literacy, the IEC coordinates financial education initiatives (including financial education for retirement planning) in society. The Strategy serves to empower Hong Kong people to make informed and responsible financial decisions for themselves and their families.
Established in November 2012 and supported by the Education Bureau and all four financial regulators in Hong Kong, IEC is an organisation dedicated to improving financial literacy with working adults as one of the our key audiences.
"As an impartial financial educator, we see a pressing need to improve Hong Kong people's financial capabilities and to empower them to prepare better for their retirement, especially with the number of retirees increasing," said Mr Kneebone, adding that the IEC is ready and willing to increase the financial education on retirement planning available for the public in Hong Kong.
The submission has been posted on the IEC website.
Note 1: IEC Research: Knowledge, Attitudes and Behaviour towards Money and Debt Management