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Source: http://www.guardian.co.uk/money/2009/jun/10/hsbc-pensions-survey

International survey suggests more than 20% are dipping into nest-eggs to pay down debt

More than 20% of the world’s workers have dipped into their savings to pay down debt and 13% have stopped saving altogether, according to a study of retirement trends over the past year.

In Britain, China, India and the US, the study suggests, savings have taken a back seat to maintaining living standards threatened by the global downturn.

According to research by HSBC, almost nine out of 10 people feel they are unprepared for retirement, and three-quarters do not know what income they can expect when they stop working.

Even in countries where the population is relatively young, there is a degree of panic among legislators keen to prepare for the day when over-65s outnumber schoolchildren. According to HSBC’s head of insurance, Clive Bannister, China is drafting plans for a nationwide scheme based on an occupational pension model established in Hong Kong. At the moment, most Chinese workers fall outside the limited number of occupational schemes and must rely for a retirement income on younger family members or their own small savings.

Last year, Britain reached the point at which 65-year-olds outnumbered 16-year-olds.

Bannister said the report, which was based on interviews with 15,000 people in 15 countries, showed there was a “downturn deficit” that the state alone could not solve. He said: “the recession means that people are worrying more about surviving from day-to-day than they are concerned about the future”.

He added that the situation in fast-growing economies such as India and China was more difficult. “We can see the state retreating across the globe as the number of older people increases quite dramatically. There simply won’t be enough workers to support a retired population through taxation. In emerging economies, falling state benefits means that, more than elsewhere, individuals must look after themselves.”

The last six months has seen a severe downturn in projections for retirement savings after a torrid two years for world stock markets and steep declines in interest rates. The problem is compounded by increases in life expectancy in most countries that mean pension planning must be extended to cope with a longer retirement.

Several countries, including Britain, have sought to raise the retirement age, but the burden of working longer has, in the main, been shifted by the current generation of over-50s to younger workers.

Previous HSBC studies have shown that workers from China to Britain expect to work beyond the age when they receive state pensions. But while many workers will remain fit enough to keep working into their 70s, others will find that they are unable to carry on and could fall into poverty.

The reluctance to save in the downturn adds to the “unpreparedness gap” being felt in every major economy, the bank said.

Stephen Green, the bank’s chairman, said: “A perfect storm is confronting pensions planning, created by an ageing population, falling pension fund values, a drop in state and employer contributions and an economic downturn which is forcing people to make financial choices.”

Green wants governments to support education schemes and financial advice centres for workers to make informed choices about their retirement planning.