End of pandemic support and higher inflation driving increased financial strain across Asia, according to new Principal® survey
Research finds lower levels of savings, higher levels of debt hampering populations’ ability to set and achieve long-term retirement goals across Singapore, Hong Kong and Malaysia
20 June 2023
Against the backdrop of rising inflation and the end of pandemic-related financial support from governments and employers, 40% of people surveyed across Singapore, Hong Kong, and Malaysia are not confident they can manage their finances without additional financial assistance according to new research from Principal Financial Group®.
To assess populations’ perceptions of financial inclusion, Principal fielded a survey of 1,500 respondents across Singapore, Hong Kong and Malaysia as a precursor to the second annual Global Financial Inclusion Index, which will be released this fall. The study found that macroeconomic headwinds have begun to impede people’s ability to save for retirement and plan for their financial future.
“Across Hong Kong, Malaysia, and Singapore, people are increasingly challenged to balance today's needs against planning for the future," said Thomas Cheong, president of Asia for Principal. “Between high inflation and rising interest rates, macroeconomic and socioeconomic factors are having a greater impact on individuals’ sense of financial stability than they did before the pandemic. Considering this, Principal is focused on how we can help clients and customers, not only through our products and services, but through our philanthropic partnerships as well.”
Falling savings and rising debts put strain on day-to-day costs
Over the last two years, over half (51%) of people surveyed across all Asia markets said their savings had decreased and 43% said their debt levels had increased, making it harder to meet everyday expenses. Over a third (34%) of respondents say it is harder today to afford daily bills, such as mortgage, energy, insurance and fuel expenses, than it was two years ago. The same proportion (34%) are finding it harder to pay an unexpected expense without borrowing money or asking friends and family for help.
Balancing saving for the future with managing immediate needs
In the face of present-day financial challenges, a growing proportion are faced with the hard choices of balancing present day financial pressures with planning for the future and rainy-day and retirement savings. Across all markets, 43% agree that saving for retirement is now more challenging and 40% are struggling to set financial plans for old age and plan longer term financial goals. Half of respondents (50%) also feel family members are more reliant on them financially than they were two years ago, therefore, difficulties in saving for the long term may also be explained by the increased financial demands of caring for elderly relatives and affording childcare costs.
As crisis financial support ends, employers have a greater role to play
Around one in three (36%) respondents are dissatisfied with their current financial situation and many feel in a materially worse financial position today compared to before the pandemic and the subsequent global rise in the cost of living.
When asked what, if anything, would be the most useful in helping people feel more financially supported, 21% would like to see higher contributions towards their pension from their workplace. These findings suggest employers have a role to play. Changes to the future of work can also make a difference, offering people greater flexibility to care for their families with 21% saying extending or making permanent flexibility in work location and working hours would be beneficial.
“Looking to the future, we hope understanding the economic struggles and financial situations of those in Hong Kong, Malaysia, and Singapore will help governments, financial institutions, and employers ascertain how they can work together to drive positive change through effective policies and programs,” adds Cheong. “As a firm with global pension and retirement expertise, this study reinforces our commitment to help more people access financial security through advice and encouraging clients to start early and be disciplined in saving consistently.
More information on the survey findings is available here. The second annual Global Financial Inclusion Index will be released this fall.
About Principal Financial Group®
Principal Financial Group® (Nasdaq: PFG) is a global financial company with 19,000 employees3 passionate about improving the wealth and well-being of people and businesses. In business for more than 140 years, we’re helping more than 62 million customers4 plan, protect, invest, and retire, while working to support the communities where we do business, and build a diverse, inclusive workforce. Principal® is proud to be recognized as one of America’s 100 Most Sustainable Companies5, a member of the Bloomberg Gender Equality Index, and a “Best Place to Work in Money Management6.” Learn more about Principal and our commitment to building a better future at principal.com.
1 As of March 31, 2023
2 Ethisphere, 2023
3 Pensions & Investments, 2022
Global Financial Inclusion Index is a proprietary model output based upon certain assumptions that may change, are not guaranteed and should not be relied upon as a significant basis for an investment decision.
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