China, for instance, has pension reserves of about 10% of its GDP, worth about US$1.5 trillion ($2.02 trillion). However, China’s population peaked a decade earlier than expected, significantly affecting its future demographic dividend. Over the remaining century, its population will be cut in half — reduced by about 650 million at a rate of nine million people per year. Although the pension reserves are expected to grow, they will be increasingly insufficient, says Dommermuth.
Underpinned by strong filial piety values, ageing parents in Asia have historically relied on their adult children for financial provision. With the heightened inflation, slowing wage growth and other changes in family dynamics, however, this may no longer be a viable option.
According to Manulife Investment Management head of wealth and asset management Michael Dommermuth, Asia accounts for 63% of the elderly population worldwide. Despite this, the region only accounts for about 12% of global pension reserves.
