India’s working population relies heavily on cash deposits and second domestic property to generate post-retirement income, according to HSBC’s latest report – The Future of Retirement A balancing act.
The report also shows, working people in India believe that buying a house and paying for children’s education were the top two factors, which have significantly impacted their ability to save for retirement.
The report represents the views of more than 16,000 people in 15 countries and territories worldwide with 1,000 respondents from India. The findings are based on an online poll conducted by Ipsos MORI in August and September 2014.
In all 88% of respondents in India, also the highest proportion amongst the polled countries, said they were confident that cash deposits in the banks or trusts were a good option to generate income for retirement. In Indonesia, 82% preferred cash deposits while the figure is 64% in the USA and 56% for UK, according to the report.
The proportion of Indians who are confident of second domestic property working as source of retirement income is 85%, behind that of Indonesia (90%) but ahead of USA (54%) and UK (60%).
Insurance products (81%), personal pension schemes (80%) and employer pension schemes (76%) are some of the other popular ways Indians prefer for retirement income.
Sanjiv Sud, Head of Retail Banking and Wealth Management, HSBC India said: “Our research shows, Indians are finally realising that they are not adequately saving for a comfortable retirement. The preferred means of cash deposits and income from second home, opted by Indians, alone may not deliver what they hope for.”
He added: “People must assess a variety of instruments beyond the traditional ones before choosing the right options. At HSBC, we provide clients need-based advice to generate long-term retirement savings using an array of customised products and services.”
The HSBC survey shows, living comfortably during retirement is a real concern for many working Indians. Almost three quarters (74%) of pre-retirees are concerned about having enough money to live comfortably in retirement. For women, this figure rises to 79%, compared with 71% of men.
Working people experience ‘life events’, which adversely impact their ability to save for retirement. India, along with Malaysia, has the largest proportion of people (41%) who think buying a home or paying for its mortgage adversely impacted their ability to save for retirement, the report says. This compares with global average of 32% and that of 28% in Brazil and 29% in Mexico.
Also, 29% of Indians believe, paying for children’s education affected their retirement saving plans, compared to a global average of 24%.
The current economic downturn (22%), significant drop in earnings (20%), job loss (17%) and illness or accident (17%) are other key events, which have impacted the ability of Indians to save for retirement, it shows.
“Start saving early and keep re-filling your retirement pots while being wary of unexpected events, which may dig a hole into your savings,” said Sanjiv Sud, Head of Retail Banking and Wealth Management, HSBC India. “That’s a simple way to save substantially for retirement.”