Sun Life survey highlights inflation challenges for retirees in Asia

Retirees in the Philippines are struggling financially amid high inflation, according to a Sun Life Asia survey.

Many of them lament past financial decisions, citing inadequate savings, poor investment choices and early retirement as key sources of regret.

Results of the survey, "Retirement Reimagined: Facing the Future with Confidence" — comprising 3,500 respondents across Asia, including the Philippines — showed 73 percent of Filipino retirees regretted not saving enough, 47 percent wished they had invested more wisely and 38 percent felt they retired too early.

A significant 25 percent said they have been caught off guard by the high cost of living, with 77 percent citing increased general living expenses and 46 attributing it to health care costs.

Despite efforts in savings, the Filipino participants admitted failure in financial preparation. While a number of them managed to save at least 10 percent of their income for retirement, 37 percent said they did not save at all and 21 percent did not foresee their retirement expenses, forcing them to cut back on spending or seek financial support from their respective families.

Inflation has worsened the situation. The Philippines is suffering more from high inflation rates than the Asian average, the survey said.

Consumer price growth hit a 14-year high of 8.7 percent in January 2023, which led the Bangko Sentral ng Pilipinas to tighten its monetary policy.

To date, inflation has settled within the 2.0- to 4.0-percent target range of the central bank at 3.4 percent and the average core inflation to around 2.4 percent, following the four-year low of 1.9 percent in September.

Carla Gonzalez-Chong, Sun Life Philippines chief client experience and marketing officer, stressed the value of financial literacy in addressing these challenges.

"Financial literacy remains key," she said. "We are committed to this advocacy to help more Filipinos overcome the obstacles and enjoy quality lives in their golden years."

The survey also revealed a growing trend among young Filipinos to delay retirement in response to rising living expenses.

Some expect to retire at an average age of 65, significantly later than the current retirees' average of 58. Many younger workers have postponed their retirement plans, with 59 percent citing the necessity of sufficient savings and 46 percent mentioning the demands of covering for increasing expenses.

Source: Business World and Sunlife

Narrowing Asia's financial inclusion gap

Nearly a quarter of the APAC population still lacks access to traditional banking services, according to Statista. Translated, this is hundreds of millions of people who are either unbanked or underbanked, with no access to savings accounts, loans or formal credit.

However, the regulatory environment in many Asian countries is rapidly changing as governments come to grips with the digital revolution.

For example, India's Unified Payments Interface is making digital payments accessible to people of all socioeconomic backgrounds. The benefits support the growth of fintech companies, improve the efficiency of government services, and boost the growth of e-commerce and digital businesses.

In Indonesia, Bank Rakyat Indonesia (BRI) has been leading the charge. Its BRILink network uses local banking agents, allowing people in remote areas to access banking services without visiting a physical branch. Millions have gained access to financial services.

As a result, the thirst for modern payment infrastructure is exploding for existing banking customers. In the Asean region, for example, banks and fintechs increasingly see the need to improve their products to better meet customer needs; digital, hyper-personalized, instant and embedded payment experiences.

However, the emerging policy and innovation initiatives across the region will also create the impetus for tech companies to finally and meaningfully drive significant change for the large swathes of the region's unbanked populations.

It's now up to the industry to respond.

To be clear, financial inclusion is more than just a noble goal — it is a strategic imperative that can significantly boost economic growth, prosperity and stability.

For technology companies, this is a means to tap into substantial market potential.

In our view, the role of tech companies is to provide the tools and infrastructure necessary for financial institutions to offer more accessible services — solutions not only technologically advanced but also culturally and economically tailored to specific markets.

For example, by 2023, more than 480 million bank accounts were opened under India's Pradhan Mantri Jan Dhan Yojana (PMJDY), drastically reducing the number of unbanked individuals, and enabling direct benefit transfers from the government.

Tech innovations like mobile banking, microloans, and digital payment solutions offer services that are both affordable and accessible.

However, these solutions aren't going to magically emerge or reach those who need them.

If fintechs are going to develop solutions that will help to narrow the bankable gap, they need to understand and meet the unique needs of Asian consumers and the commercial landscape more broadly. It also requires fintechs to be alive to the megatrends facing the region.

First, Asia's diverse and large population demands solutions that can scale and be tailored to local needs. This dynamic is pushing fintechs to innovate quickly and efficiently.

Additionally, the competitive landscape in Asia is intense. Startups and established financial institutions are competing for market share. Competition fuels initiative, as companies strive to differentiate themselves with superior products and services.

Asia's relatively young population, like digital natives worldwide, is open to adopting new technologies, especially in digital payments. The demographic trend creates fertile ground for experimenting with new payment solutions.

Asia's continued shift away from cash increases the need to deliver digital payment reliability as the growth trends deepen and accelerate. There's still work required to build confidence and ensure systems are robust enough to handle the rising volume of transactions. This is crucial in Asia, where the stakes of any system failure are high.

Reliability isn't just about transaction success rates; it's about making sure every stakeholder — consumers, merchants and financial institutions — can have faith in the systems.

Security is critical. As more people and businesses rely on electronic payments, the systems supporting these transactions must be secure against external threats and internal vulnerabilities. One breach could destroy carefully built reputations.

This is where reliability goes beyond technology. It's about building trust with consumers new to electronic payments, giving them confidence to use new products and methods. Tech companies can work closely with regulators, financial institutions and stakeholders, invest in consumer education, and continue to develop technology to underpin these systems. The benefits will be felt by everyone.

The future of fintech in Asia is bright, with strategic expansion, innovation and reliability at its core.

As governments continue to prioritize financial inclusion, and as the shift away from cash accelerates, the role of tech companies will only become more crucial. By focusing on these key areas, we can ensure that Asia's financial revolution not only continues but also thrives.

Source: Manila Times

More Filipinos adapting to ‘hustle culture’

Majority of Filipinos juggle multiple jobs to boost their income sources in what market research firm Kantar called an emergent “hustle culture” in the Philippine workforce.

“We’ve observed that this behavior has resulted [in] a ‘hustle culture’ among Filipinos, as they try to earn more but at the expense of time for chores, personal interests and other activities,” Laurice Obama, consumer and shopper insight director at Kantar Philippines, said in a statement.

Obama cited Kantar’s survey of 2,000 households from February to April showing that seven out of 10 Filipinos manage their family’s finances by moonlighting or starting a business on the side.

Apart from the majority of the surveyed households, 19 percent said they were “struggling to keep afloat” because of retrenchment or working less hours, which reduce their take-home pay.

Only around 8 percent said they were comfortable with their economic situation.

Household spending

According to recent data from the Philippine Statistics Authority (PSA), household spending dropped to 4.6 percent in the second quarter from 5.5 percent in the same period last year.

Filipino consumers, according to the study, usually buy soft drinks, coffee, water, milk, instant noodles, biscuits and crackers when they visit the grocery stores.

But those struggling with their finances remain “mindful” of their purchases, as they cut expenses by making their grocery list shorter to make ends meet.

“In their buying decision, [the study shows] that those who are managing are stretching their funds to get more value for their money,” Kantar said.

“This group does grocery shopping less often and are buying even less than what they intended to when they visit stores,” its study noted further.

These cash-strapped consumers not only trim their grocery expenses but also look for discounts.

According to PSA’s data, consumers spend less on clothing and footwear. The primary contributors to consumption are transportation, housing, water, electricity and gas, among other priorities.

Assets growing

Kantar’s survey showed that 52 percent of respondents believe this will be their status quo in the next 12 months, 7 percent expect things to get worse and 41 percent believe their situation will get better.

On the other hand, a recent study by Allianz Global said net financial assets per capita in the Philippines grew by 13.2 percent year-on-year to 1,940 euros (P121,000 based on current foreign exchange rates) in 2023, placing the country in the 49th spot out of 60 economies covered by its latest “Global Wealth Report.”

While that figure still kept the Philippines among the poorer countries in Asia, the growth of its financial assets increased by 13.2 percent, the fastest clip in six years and well ahead of China or India, Global Allianz said.

Allianz Global said the 16 percent jump in asset class securities was the “main driver” of growth.

Other financial assets like bank deposits grew “strongly” at 9.1 percent, while insurance and pensions rose 9.8 percent.

But Allianz said insurance and pensions remained “underweighted” in Filipino households’ portfolios with a share of 7 percent, way lower compared to the 57 percent share of bank deposits.

But while wealth rose, the growth in liabilities of Filipinos also continued at 12.9 percent. As a result, Allianz Global said the debt ratio climbed to 27.1 percent last year, which was “still at a rather low level.”

“2023 was marked by sharp monetary tightening. But economies proved resilient and markets even boomed,” the report said.

Overall, Allianz Global said financial assets of private households worldwide recorded strong growth of 7.6 percent last year, making up for the 3.5 percent losses in 2022. Total financial assets amounted to 239 trillion euros at the end of 2023.

By region, financial assets of Asian households increased by 7.5 percent in 2023 to 63.8 trillion euros, a quarter above the level in Europe. All asset classes contributed to this increase, with bank deposits being the main driver after rising by 9.3 percent.

Source: Inquirer