New Prudential “Financial Wellbeing Tracker”: Hong Kongers more upbeat on current financial matters than future ones, as tracker scores show pessimism about long-term financial freedom

(4 January 2024, Hong Kong) The inaugural “Financial Wellbeing Tracker”¹ (the “Tracker”) announced today by Prudential Hong Kong Limited (“Prudential”) reveals that people of Hong Kong are barely confident about their financial wellbeing overall, with only current financial security being a point of notable strength.

Scoring an underwhelming 53.1 points out of 100, the findings suggest Hong Kong residents are more positive about their short-term financial security, while they deal with present financial matters with more confidence, rather than plan for long-term financial freedom. The survey assesses financial health from four perspectives² – “Security Now,” “Security in the Future,” “Financial Freedom Now” and “Financial Freedom in the Future” – and examines the Hong Kong public’s outlook, aspirations, worries and financial goals related to their financial wellbeing.

The survey findings show that respondents gain higher index scores for financial security both in the present and the future, with 59.9 points for financial security right now and 52.6 points for future financial security, as opposed to present freedom (52.3 points) and future freedom (47.5 points).

“Despite setting clear savings targets and making monthly savings, people of Hong Kong struggle to enjoy financial freedom,” said Felix Fung, Chief Product Officer at Prudential Hong Kong. “As more than half (52%) of their monthly income is spent on daily expenses, they have to focus on the here-and-now rather than their future financial needs. This may impact their readiness to achieve financial goals, leaving them less confident in their post-retirement finances.”

Survey findings show optimism rising with age

When asking about their concerns in life, Fung added that, with age, the concerns of 50-60 age group shift from their parents’ health to external factors like impact on their standard of living (57%), housing costs (56%) and economic conditions (51%). This sheds light on the importance of advanced financial planning, which is instrumental for maintaining their lifestyle in retirement.

The survey also reveals that the Tracker rises with age. The younger generations, aged 18-35, scores 51.9 points, which rises to 52.4 points for those aged 36-49. Those in the 50-60 age-bracket are the most financially optimistic with an overall score of 55.1 points.

Interestingly, the older age groups (aged 36-49 and aged 50-60) consistently achieve higher scores across all pillars, except for “Security Now,” where the 36-49 age group scores the lowest at 59.3 points. This feeling of lower present financial security can be explained by the various financial burdens including familial duties, such as parents’ allowances (27%), as well as childcare and children’s education (27%), which eat into monthly savings.

When considering the future, the younger generations (aged 18-35) perceive themselves as having less security and freedom compared to their older counterparts. This is evident in the challenges they face with a lack of clear saving targets (26%) and certain financial responsibility (43%). Conversely, the over-50s, who likely have accumulated wealth and are no longer burdened with supporting their and/or children financially, possess a more optimistic outlook.

The tracker identifies five key financial attitudes

Prudential has identified five distinct personas based on respondents’ financial attitudes, lifestyles and areas of concerns, which span a spectrum from the independent indoor-living loners and the punctilious risk-averse conformists to the proactive adventurous explorers and the home-oriented family altruists, as well as the penny-pinching inquisitive rationalists, each reflecting unique behaviours and concerns regarding financial wellbeing.

Of the five personas, the indoor-living loners are most likely to be unsatisfied with their current financial status (52%), while the risk-averse conformists are less confident about their future financial status (75%). These two groups score below average in overall financial wellness, with 41.2 points and 47.8 points respectively.

In contrast, the adventurous explorers (58.2 points), who tend to put most value on pleasure, and the family altruists (61.5 points), who are the most optimistic about their retirement finances, both feel more financially healthy than on average. An overview on their monthly asset allocation shows that they prioritise savings (35% of adventurous explorers’ total assets vs 33% of family altruists’ total assets) and investments (22% of adventurous explorers’ total assets vs 20% family altruists’ total assets) more than the other groups.

Also attaching significant importance to savings accumulation are the inquisitive rationalists, who have a habit of both saving money every month (85%) and setting clear savings goals (76%). They are achieving the highest score (61.5 points) for financial health. The strong performance of the adventurous explorers, family altruists and inquisitive rationalists underscores the importance of savings and investments for achieving greater future financial freedom and helping to ensure a better retirement life.

Enhanced PRURetirement Deferred Annuity Plan safeguards finances across life stages for a better financial future

“The new insights into the financial status of Hong Kong people, particularly regarding the gap between their present and future financial wellbeing, tie in with the launch of an enhanced edition of our PRURetirement Deferred Annuity Plan to provide more annuity plan options and ancillary features,” Fung added. “Our goal is to better cater to customers’ varying needs at different stages of life, empowering them with greater financial security and freedom. This serves as a testament to our unwavering commitment to improving their financial health.”

Key enhancements to the plan include new annuity plan options for more flexible premium payment and accumulation period (see the table below for eight different combinations of premium payment). For each option, the maximum issue age has also been extended by five years until 75 years old (ANB), with lower minimum total premiums paid.

The new plan allows the younger generation and pre-retirees to start their financial planning based on their liquidity needs and ability to contribute to their annuity account over time. It includes three new features tailored for different life stages to help customers overcome unexpected challenges:

• Smart Care Cover – Allows the policyholder to designate a family member in advance to claim a benefit amount equivalent to the surrender value upon diagnosis of covered diseases³, which helps them financially through the difficult times
• Unemployment Cover - Extends the grace period for premium payment to up to 365 days upon involuntarily unemployment easing the policyholder’s financial burden.
• Extra Accidental Death Cover – Provides an extra 50% of total premium paid as al death benefit if the life assured has an accident within the accumulation period.

Selected customers of life and employee benefits enrolled in the enhanced PRURetirement Deferred Annuity Plan can enjoy an extra 5% premium refund, increasing the total premium refund by up to 25%.

Featuring Vivian Chow in latest promotional video

Set to debut officially on 4 January 2024, the new Prudential promotional video will feature Goddess-of-the-generation Vivian Chow Wai-man. With her distinguished career spanning music, film, radio and television, Vivian will personify the essence of attentive listening and enduring love, serving as a poignant reminder that our love endures forever when we truly listen. For more information about the revamped PRURetirement Deferred Annuity Plan and related promotional offers, please refer to Prudential’s official website.

¹ Prudential conducted a survey in September 2023, where a total of 733 Hong Kong citizens who are aged between 18 and 60 years were interviewed.
² “Security Now” means having control over daily and monthly; “Security in the Future” means being able to absorb a financial shock; “Financial Freedom Now” means having the financial freedom to make choices to enjoy life; and “Freedom of Choice in the Future” means being on track to meet financial goals.
³ Covered diseases include mental incapacity, terminal illness, coma, loss of independent existence, apallic syndrome, major head trauma or paralysis.

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Disclaimer

PRURetirement Deferred Annuity Plan is underwritten by Prudential Hong Kong Limited. This document does not contain the full terms and conditions of this plan and is for reference only. For further details and the terms and conditions of this plan, customers can ask Prudential for a sample of the policy document. This document is for distribution in Hong Kong only. It is not an offer to sell or solicitation to buy or provide any insurance product outside Hong Kong. Prudential does not offer or sell any insurance product in any jurisdictions outside Hong Kong where such offering or sale of the insurance product is illegal under the laws of such jurisdictions.

 

About Prudential Hong Kong Limited

Prudential has been serving the people of Hong Kong since 1964. Through Prudential Hong Kong Limited and Prudential General Insurance Hong Kong Limited, we provide a range of financial planning services and products including individual life insurance, investment-linked insurance, retirement solutions, health and medical protection, general insurance, and employee benefits.

Please visit www.prudential.com.hk for more information.