Retirement plan for 49% of Taiwanese is to 'not retire'

85% do not have confidence that their pension will be enough to live on

TAIPEI (Taiwan News) -- According to the latest investment survey by American investment management firm Legg Mason, Inc., the retirement plan of nearly half of Taiwanese investors is simply to "not retire."

Up to 85 percent of respondents do not believe their pension income will be enough to survive on, and only 13 percent of respondents are confident in the government pension. The 49 percent of respondents planning on not retiring surpasses the global average of 39 percent and 43 percent of Asia (excluding Japan).

When asked by the survey if the respondents described themselves as "hedonists," "hardworking," "rainy day planners," or "comprehensive planners," 55 percent of Taiwanese described themselves as hardworking, significantly higher than the global average of 49 percent. 

Of the 49 percent who said they will not retire, many listed their lack of confidence in the government provided pension plan. Their reasons for their lack of confidence in the government pension include: the low contribution rate, limited investment options, and that their own investments would be able to gain a higher return on investment. 

In addition, there is a big difference in the expected rate of return on investments by Taiwanese and the actual rate of return. Taiwan investors expect a rate of return of 8.92 percent, but their actual rate of return was only 5.64 percent, leading to a gap of 3.28 percentage, points the largest such gap in the world for the third year in a row. The world average for the gap between expected and actual rate of return is only 2.1 percentage points. 

Despite the implementation of the "one fixed day off and one flexible rest day" (一例一休) system, 53 percent of Taiwanese still are not able to take vacations on a regular basis, the highest percentage in the world and well above the global average of 39 percent. 

At the same time, the survey shows that for the coming year, over 60 percent of Taiwan's investors are most concerned about "instability of the country's economy." Other causes for concern listed the global economic turmoil, local political turmoil, and inflation. 

Up to 72 percent of Taiwanese investors choose to invest in traditionally defensive asset classes such as cash, fixed income products, and gold.

Legg Mason general manager, Wang Hsin-ju (王心如), recommended, "If a Taiwanese investor wants to increase his potential return, or reach a financial goal, he should carefully examine his investment structure."