shanghai hr conference - mercer...should participate in private pension schemes. •current pension...
TRANSCRIPT
© MERCER 2019 0
Shanghai HR
Conference G L O B A L P E N S I O N S TAT U S
A N D I T S E N L I G H T E N M E N T T O
C H I N A
M E R C E R G L O B A L H R C O N F E R E N C E S
EDWARD FANG
CONSULTING DIRECTOR
SEPTEMBER 19
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50+ C O U N T R I E S
8,700+ S T A F F
60+ C I T I E S
70+ Y E A R S E X P E R I E N C E
*Assets under advisement includes aggregated data for Mercer Investment Consulting LLC and its affiliated companies globally (“Mercer”). Data is derived from a variety of sources, including, but not limited to, third-
party custodians or investment managers, regulatory filings, and client self-reported data. Mercer has not independently verified the data. Where available, data is provided as of 31 December 2018 (“Reporting Date”).
If data was not available as of the Reporting Date, information from a date closest in time to the Reporting Date, which may be of a more recent date than the Reporting Date, was included. Data includes assets of
clients that have engaged Mercer to provide project-based services within the 12-month period ending on the Reporting Date, and assets of clients that subscribe to Mercer’s Manager Research database.
**AUM figure as or 30 June 2019.
M E R C E R I N V E S T M E N T B U S I N E S S
MERCER 4
TOOLS AND RESEARCH
• Global Investment Manager
Database
• Performance Analytics
• Investment Research
• Operational Due Diligence
• MercerInsight Platform
• Global Research “Boutique”
$ 7trn *
Subscriber Assets
Covering 7,000+ Investment
Managers
A D V I C E
• Investment Strategy
• Asset Allocation
• Portfolio Construction
• Manager Selection
• Responsible Investment
• Transitions, Custody, FX
$ 12.3trn *
Under Advice
10,600+ Consulting Clients
SOLUTIONS
• Investment Management
• Single Asset Class
• Alternative Assets
• Diversified Portfolios
• Liability Solutions
• Multi Managers for Single
Industry
• Transition Solution
$ 241bn **
Under Implementation
1,100+ Discretionary Clients
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P E N S I O N G A P
• The pension gap in 2015 is about $70
trillion
• According to our forecast, the gap will
grow by 5% annually, reaching $400
trillion in 2050, which is equivalent to an
additional $28 billion in deficit per day
• The pension gap mainly depends on –
Target replacement rate (70%)
Retirement age (60-70 years old) and
Average life expectancy
4.3
2.5
3.5
4.5
2.4
4.4
1.8
2.8
2 2
3
5
养老金缺口的规模(万亿美元,
2015年)
Column3 Column2 Column1
2012 2013 2014 2015
Source: Mercer
来源:美世数据
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T H E M U L T I - P I L L A R A P P R O A C H
PILLAR 0
• A basic public pension that provides a minimal level of protection
PILLAR 1
• A public, mandatory and contributory system linked to earnings
PILLAR 2
• A private, mandatory and fully funded system
PILLAR 3
• A voluntary and fully funded system
PILLAR 4
• Financial and nonfinancial support outside formal pension arrangements
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M E L B O U R N E M E R C E R G L O B A L P E N S I O N I N D E X
• Pension coverage
• Total assets
• Contributions
• Demography
• Government debt
• Economic growth 35%
SUSTAINA
BILITY
• Benefits
• System design
• Savings
• Tax support
• Home ownership
• Growth assets
40% ADEQUACY
• Regulation
• Governance
• Protection
• Communication
• Costs 25% INTEGRITY
10 YEARS 34 COUNTRIES 40+ INDICATORS
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I D E A L S Y S T E M
A D E Q U A C Y
• Provide minimum pension to the poor
who occupy a reasonable proportion
of society average income.
• Maintain net (after-tax) replacement
rate of at least 65% when a full-time
employee with average income
retires.
• At least 60% of cumulative retirement
benefits can be used as a source of
income.
S U S TA I N A B I L I T Y
• At least 70% working-age population
should participate in private pension
schemes.
• Current pension assets should
exceed 100% of GDP in order to
prepare for future burden.
• Employment rate of those aged 55-
64 should reach at least 70%.
I N T E G R I T Y
• Strict and prudent regulation of
private pension schemes.
• Regular membership communication,
including personal statements,
expected retirement income and
annual reports.
• Define the funding requirements for
Defined Benefits and Defined
Contributions schemes.
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G L O B A L G R A D E S
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N AT U R A L T E N S I O N B E T W E E N
A D E Q U A C Y A N D S U S T A I N A B I L I T Y
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P R O F E S S I O N A L I N V E S T M E N T C A P A B I L I T I E S H E L P
O B T A I N M O R E E F F E C T I V E R E T U R N S
Scope of quartiles
(i.e. 25% to 75%)
Median 90% Range
Simulated multiples of real wages at retirement age of 65
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C H I N A
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C H I N E S E V I E W S O N P E N S I O N
New Employee Working hard for a better life Housing
1/3
NEVER counting savings for retirement
85%
Willing to CHANGE CURRENT
LIFESTYLE for better retirement life
Family
formation
Health is essential to Wealth
Families formed
Retraining Reaching retirement Phased retirement
86%
Regard SKILL DEVELOPMENTS are
the most important opportunities and
benefits in work
KEEP HEALTHY
Ranks FIRST in good lifestyles after
retirement
2/3 Hope to live over 80 years old
1/3 Have confidence on it
68% Hope to
continue
working after
retirement
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S U R V E Y A B O U T ‘ W H O B E R E S P O N S I B L E F O R
E N S U R I N G E N O U G H I N C O M E A F T E R R E T I R E M E N T ?
1%
5%
14%
15%
23%
32%
52%
74%
0% 20% 40% 60% 80%
None of these
Personal financial advisor orsecurity broker
Former or Incumbent Employer(s)
Personal Insurance
Family
Personal Pension/InvestmentFund/Bank
Government
Individual
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S O L V I N G C H A L L E N G E S T O C H I N A R E T I R E M E N T S C H E M E
Raising minimum support to
the poorest elderly
Increasing coverage of
occupation pension system
Improve communications
to members
Force part of supplementary
pension to be used as
income source after retirement
Gradually raise the age of
receiving national pension
More investment options to
greater growth asset exposures
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E N L I G H T E N M E N T S T O C H I N A P E N S I O N S Y S T E M
• Construction of Second
Pillar Pension System
• Individual retirement
accounts
SYSTEM DESIGN
• Establishment of tax
incentives for participation
in pension schemes
• Delayed retirement age
PARTICIPATION RATE
• Default Portfolio (Pension
Target Date Fund)
• Investing in growth assets
SAVINGS LEVEL
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P E N S I O N I N V E S T M E N T I N C H I N A
1. Managing volatility risk of
economic cycle from a LONG-
TERM PERSPECTIVE
2. Implementing value preservation
and appreciation through
DIVERSIFIED INVESTMENT
3. Gradually opening up
OVERSEAS INVESTMENT for a
long-term positive impact
4. Improving GOVERNANCE
STRUCTURE to strengthen
confidence
5. GREEN FINANCE
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F o r f u r t h e r c o m m u n i c a t i o n s p l e a s e c o n t a c t : L e o S h e n C h i n a W e a l t h L e a d e r T e l : + 8 6 2 1 6 1 4 1 6 6 9 7 E m a i l : l e o . s h e n @ m e r c e r . c o m E d w a r d F a n g C o n s u l t i n g D i r e c t o r T e l : + 8 6 2 1 6 1 0 3 5 4 1 7 E m a i l : x i a n g . f a n g @ m e r c e r . c o m A d d r e s s : R o o m 4 3 0 1 , H o n g K o n g N e w W o r l d T o w e r , 3 0 0 H u a i h a i Z h o n g R d . , S h a n g h a i , 2 0 0 0 2 1
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