In Asia, most left unprepared for future care needs
Originally published at the South China Morning Post on November 17, 2015.
Governments across Asia, including Hong Kong, are not doing enough to provide funding and adequate care services for the elderly - leaving many feeling unprepared to deal with future care needs.
Despite a high level of awareness regarding the need for long-term care, many in Asia do not know how to start preparing and feel unable to afford such services, according to a report released today by Swiss Reinsurance Company. The study surveyed 6300 respondents in Hong Kong, China, Japan, Korea, Taiwan and Singapore.
“Increasingly, consumers are expressing concern over their ability to pay for their future care, given that many believe their governments will not be able to fund such expenditure and because the cost of care is highly unpredictable,” the report said.
Only 10 per cent of participants felt they had the financial resources to fund their long-term care requirements, with many reporting a funding gap of 50 to 60 per cent of estimated care costs.
Approximately a sixth of respondents said they have some form of insurance.
“The reality is that we are not really prepared for old age, and in the next decade or so we have to find a solution to support our elderly population,” said Nelson Chow Wing-sun, professor of social work at the University of Hong Kong. “Filial piety is diminishing and those who do have children only have one or two. You have to support yourself when you grow old.”
The number of elderly people in Asia is expected to reach 572 million by 2030, almost double from 2010, and 10 per cent of the population will be aged 65 or more by 2025.
In Hong Kong, affordability is the most crucial factor for those considering insurance and investing in other long term care services, with 38 per cent citing it as their top reason. About 20 per cent said they were financially able to cover the costs of their parents’ care needs - the lowest percentage in all the countries surveyed.
Forty per cent of Hong Kong respondents said that they felt prepared for future care needs, and 34 per cent trust that the government will adequately fund and provide such services.
This month, a proposal to dramatically decrease the cost of the Mandatory Provident Fund, a compulsory saving scheme for retirement, will be submitted to Legco. The proposal requires all schemes to have a “core fund” - for those who do not specify how their contributions should be invested - and decrease the management fee cap for such funds from 1.64 per cent to 0.75 per cent.
If approved, it will launch at the end of 2016, and will be the biggest reform of the MPF since the programme was established in 2000.
“The return is simply quite low and not satisfactory at all,” Chow said. “Even for one earning a medium income, working 30 years - the sum they accumulate is less than one million dollars. How can you support yourself? The amount accumulated is too small for most people.”