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|Source:||A.M. Best Company, Inc.|
Inadequate retirement income is a growing problem for aging populations in
Because regulations and many other factors differ between the markets in
The three pillars of protection for the aged, as defined by the
Because of higher life expectancy and lower birth rates, the aging population is a serious problem for many Asian countries, said Yuan. Insurers could play important roles in both the second and third pillars of old-age financial protection in the future.
By the end of 2009, 235 million urban employees were covered under a basic pension, which includes a first-tier plan and second-tier plan, according to a Celent report.
Under the first-tier plan, employers contribute 20% of earnings. In the second-tier plan, a mandatory employee contribution of 8% of salary goes to the individual’s fund and the accumulated balance in the account will then convert to pension payments using a government-determined annuity factor when the individual starts retirement.
Another 87 million rural people are enrolled in a rural pension plan, said Yuan.
For corporate pensions — the second pillar — the government encouraged corporations to establish pension plans, but enrollment is voluntary. Others are relying on individual savings, noted Yuan.
Existing corporate pensions in
In 2009, premium income generated from pension companies in
“Generally, corporate pensions in
About 87% of the working population in
An MPF, with a minimum contribution of 5% of qualifying salary from both employer and employee with a mandatory contribution ceiling, is an “important tool” for retirement planning in
With the implementation of this arrangement, MPFs will be changed from being employer-based to being more member-based. Yuan said insurers that have strong individual member distribution abilities will play a more important role in the second pillar.
Under this scheme, both employers and employees in
People can use their savings in the OA to buy a home, pay for CPF insurance, for investment and for education. Savings under the SA are for old age and investment in retirement-related financial products, while the savings under the MA can be used for hospitalization expenses and approved medical insurance.
At the end of
A new scheme, CPF Life, which will provide life-long income for the elderly in their retirement, has been offered to older CPF members since
Listen to the interview with Yuan at http://www.ambest.com/media/media.asp?RC=185219