Tuesday, January 22, 2008

Pension schemes in demand

TheStar

KUALA LUMPUR: Demand for pension schemes in Asia-Pacific is expected to gain momentum, fuelled by rapid demographic and socio-economic changes.

Allianz Asia-Pacific regional general manager (life and health) Craig Ellis said these changes included an ageing population resulting from decreasing fertility and higher life expectancy.

“The main reasons for the decline in fertility are economic growth, industrialisation, urbanisation and birth control.

“The birth rate has declined by 56% over the last 25 years, and the median age in Asia is expected to increase from 28 years now to 40 by 2050.

“This has put a strain in the development of pension schemes in the region and led to increasing demand for such schemes as people want to have a better life and less financial constraint after their retirement,” he said in an interview.

Ellis was sharing the latest findings by Allianz Global Investors regarding pension systems in nine markets, namely Australia, China, Hong Kong, India, Japan, Singapore, South Korea, Taiwan and Thailand.

Japan and South Korea would be among the oldest countries globally by 2050 and hence foresee the rapid growth of pension products in the region, he said, adding that pension assets in Asia-Pacific as a whole would see an annual growth of 9.2%, from about 1.4 trillion euros to 3.1 trillion euros in 2015.

Ellis said Malaysia was also experiencing ageing population and higher life expectancy and there was a potential market for pension products.

Recently, Bank Negara deputy governor Datuk Zamani Abdul Ghani said the proportion of Malaysians aged above 60 was expected to more than double from 7% of the total population in 2000 to 16% in 2020, and that life expectancy was expected to rise further to 79 years for females and 75 years for males with improved living standards.

Zamani said one fifth of Malaysians were expected to be over 60 years old by 2040 and, during the same period, the ratio of the population between the ages of 15 and 60 was expected to rise at a slower rate until 2020 and then fall to 63% in 2040.

The findings by Allianz also showed that the trend towards defined contribution schemes (similar to EPF in Malaysia) had accelerated strongly over the years and pension assets in some Asian countries were being increasingly outsourced to private companies for better returns.

In Asia-Pacific, Allianz has a presence in 15 markets, offering its various products and services like property and casualty insurance, life and health insurance, asset management and banking.

For the first nine months ended Sept 30, Allianz's operating profit in Asia-Pacific more than doubled to 553 million euros compared with the previous corresponding period. It registered revenue of 6.4 billion euros.

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