Press release

Fidelity report shows Hong Kong and China’s sandwich generations’ feeling more financial pressure caring for children and parents.

Asia’s Sandwich Generation – those adults ‘sandwiched’ between the competing demands of caring for both their children and their parents – is under increasing financial pressure across the region, and Hong Kong and China are feeling it the most, according to a Fidelity International (Fidelity) report undertaken by the Economist Intelligence Unit, called ‘Feeling the Squeeze: Asia’s Sandwich Generation’.

Hong Kong, 4 August 2010 - Asia’s Sandwich Generation – those adults ‘sandwiched’ between the competing demands of caring for both their children and their parents – is under increasing financial pressure across the region, and Hong Kong and China are feeling it the most, according to a Fidelity International (Fidelity) report undertaken by the Economist Intelligence Unit, called ‘Feeling the Squeeze: Asia’s Sandwich Generation’. The Report shows that people in Asia, including Australia, China, Hong Kong, Japan, Singapore, South Korea and Taiwan, are feeling the effects of an ageing population, children moving out of home later, the increasing cost of education, and in many countries, the relatively underdeveloped social security systems.

 

53% of HK respondents feel financial pressure caring for family

Hong Kong respondents are feeling the greatest pressure in caring for family. Regionally, 36% of the Sandwich Generation in Asia admitted they are struggling to cope financially with their family responsibilities, while in Hong Kong this number is significantly higher at 53%.

 

Working-age population in Hong Kong and China are also spending more time and money on their families. While education costs are recognized as high across the region -  particularly in Hong Kong where school fees were generally seen as higher - China and Hong Kong’s working-age population are also spending more on their parents than anywhere else in the region.

 

49% of HK respondents spend up to 25% of their income on their parents

49% of Hong Kong respondents spend between 11% and 25% of their income on their parents compared with 39% of the total respondents in Asia. Also, 26% of Hong Kong respondents spend between 26% and 40%, compared with 12% of Asia. In China, 52% spend between 11% and 25% of their income on their parents, and the majority of respondents in China, 75% spend more than 10 hours per week caring for their parents, while in Asia, 50% spend less than 10 hours per week caring for their parents.

 

Family care at the expense of long term financial security, living standards

According to Kerry Ching, Hong Kong Managing Director of Fidelity, the Sandwich Generation Report highlights some very real issues for the future financial security of a large number of people across the region. “The Report has highlighted that many members of the Sandwich Generation are feeling the immediate financial pressures of changing economic and social conditions, particularly those in Hong Kong and China. The lack of fully developed pension schemes in many countries in Asia means the Sandwich Generation is responding to these pressures at the expense of their long term financial security and the

standard of living they can look forward to in retirement,” she said.

 

The Report found that as a result, the ‘Sandwich Generation’ is working harder, saving less and taking fewer risks with their investments, which according to Fidelity could pose a serious threat to their future financial security and retirement. Indeed, 42% of the Sandwich Generation expects that their standard of living will decrease once they have left the workforce, yet only 16% are seeking any professional financial or insurance advice when making savings and investments decisions for their future.

 

In terms of savings, the Fidelity Report found that, unlike their counterparts in other parts of the Asia Pacific region, the Hong Kong and China Sandwich Generations favour the stock market as a savings vehicle, with 48% and 40% respectively naming it in their top two savings vehicles, compared with an aggregate response of 29% overall. Respondents in other countries, including South Korea, Japan, Taiwan and Singapore, generally showed a great aversion to risk with most opting for insurance products as secondary savings vehicles, after bank deposits. Australia was the only other exception, with many viewing property as a popular means of wealth building.

 

While the preferences for savings vehicles may vary amongst the Sandwich generation, the fundamentals of saving for financial security remain the same. Kerry Ching said, “Despite the financial pressure many people are feeling, there is still a need to focus on saving and investing, and by seeking expert professional advice, people can investigate options that can support them, and their families, now and into the future,” she said. “There are various options in terms of effectively managing spending and debt now, whatever an individual’s circumstances that can ultimately provide for a more comfortable lifestyle when income shifts from working to retirement.

 

Kerry Ching concluded, “There are a lot more and complex factors which the Sandwich Generation needs to balance and consider in order to plan effectively for their retirement, and they must be disciplined in implementing their plans and investments to meet their goals. They also need to reserve savings as well, and balance return and risk more diligently as there will be more variables that they have to face in the process. We encourage people to seek professional advice and create a comprehensive investment plan that will deliver financial rewards and peace of mind.”

 

Other key findings in the Fidelity/EIU Sandwich Generation Report include:

 

  • China’s Sandwich Generation is the largest in Asia with 37% of those between the ages of 21 and 70 (approx working age population) identifying themselves as members of this group. This is compared with an aggregate level of 20% regionally.

 

  • Japan and Australia have the smallest memberships of the Sandwich Generation with only 6% of people of working age in each country caring for parents and children concurrently.

 

  • 61% of Korea’s Sandwich Generation does not think they will be able to maintain their standard of living after retiring, compared with 42% across the region.

 

  • A large number (67%) of Singapore’s Sandwich Generation is expecting the price of their parent’s daily living expenses to increase and 88% expect an increase in the cost of their children’s education.

 

  • 19% of Australians in the Sandwich Generation have given up work to care for their children, compared to only 10% at a regional level.

 

ABOUT THE EIU / FIDELITY REPORT

The report was commissioned by Fidelity and conducted by The Economist Intelligence Unit(EIU). The EIU surveyed 700 individuals in China, Japan, Hong Kong, Singapore, South Korea, Taiwan and Australia (100 per country) between April and May 2010. Survey findings for “Asia” in this report refer to aggregate results across these countries. Survey respondents were between the ages of 21 and 70 and supporting at least one child and one parent, financially or otherwise. The survey sample included only people who fall into the “ABC1” socioeconomic classification (that is, “middle class” workers earning local median income levels and above, or with comparable purchasing power). In conducting the survey, the principal goal was to ascertain how the burden of supporting parents and children affects the decisions of workingage adults in relation to their disposable income and investment/saving behaviour.

 

ABOUT FIDELITY INTERNATIONAL

Fidelity International is an affiliate but separate company to Fidelity Investments and provides investment products and services to individuals and institutional investors outside of the Americas. Fidelity International has been in Asia for 41 years with offices in Japan, Korea, Australia, Hong Kong, Taiwan, Singapore, and China. Fidelity International manages US$215.9billion Assets Under Management (as at 31 March 2010), has over 6 million customer holdings and manages 770 funds. Fidelity International has one of the largest proprietary research teams in the world, providing insights into around 98% of the world's stock markets (as measured by the Morgan Stanley Capital International World Index, 4 June 2010).

 

IMPORTANT INFORMATION

FIL Limited, established in Bermuda, and its subsidiaries are commonly referred to as Fidelity or Fidelity International. Fidelity only gives information about its products and services. Any person considering an investment should seek independent advice on the suitability or otherwise of the particular investment. This document is issued by FIL Investment Management (Hong Kong) Limited. Fidelity, Fidelity International, and Fidelity International and Pyramid Logo are trademarks of FIL Limited.

 

MEDIA CONTACT:

 

Rowena Kwok

Fidelity International

Tel: +852 2629 2800

Email : rowena.kwok@fil.com

Jaime Leung

Fidelity International

Tel: +852 2629 2800

Email: jaime.leung@fil.com