FSC, Financial Literacy for Solid Financial System

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To have stable pension system with sufficient amount of fund is one of the key challenges most of the countries face. Aging population and financial insecurities after global economic crisis escalated the needs of pension products. At the last symposium, “High-Level Global Symposium on Financial Education: Promoting Long-Term Savings and Investment,” Financial Services Commission addressed raising financial intelligence by education as a major way to frame successful pension program of a country.

2There have been countless efforts on developing ultimate pension program around the world. There are various kinds of pension programs such as basic state pension, financial plans after retirement, pension fund, private banking and so on. Yet, most of those programs have difficult time soliciting stable amount of funds. As a society enters a phase where population is no longer growing but only aging, once successful public pension program supported by taxes would perish away. However if one could be able to self-finance even after one’s retirement, pension issue won’t be troublesome any more.

The symposium I attended was hosted by FSC jointly with FSS and OECD. This symposium made reflective references to the question on how to promote long-term savings and investment. And now, we are going to focus on the 2nd session of this symposium which was on “Promoting saving for retirement through financial education and awareness.” This session was organized by 4 countries Korea, Singapore, Australia, and Hong Kong. Each of those countries introduced their own approaches to raise public awareness on finance. And I am going to briefly tell you what they were.

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#1. Korea
Dr. Soon Young Choi, in his speech “Korea Household’s Retirement Preparedness and Challenges,” stressed the needs for new strategy to investment of households. He mentioned that most of the Korean household’s budgets consist of housings and savings. Real estates are usually backed by loans which make it hard for people to use housing as investment. Saving accounts used to generate high return, but not anymore. Saved money depreciates over time since the interest rate can’t catch up with inflation rate. In order to keep sufficient amount of money, there should be other strategy which could generate more money than savings account. He suggested that Korean citizens should rather go for risky fund with higher return rather than sticking with safe investment with low returns.

#2. Singapore
Ms. Irene Kang delivered her presentation “Securing Our Retirement.” Ms. Kang gave her country as an example where many people are actually preparing for their retirement. She mentioned that financial literacy through education and advertising strategy should be implemented so that more people are attracted to join pension system. Schools teach finances to students at early stage, and many campaign posters are being put at places like bus stops and metro transitions. By this way, people in Singapore are aware of pension programs and other ways to back up money for retirement.

#3. Australia
The presentation “Australian Securities and Investments Commission” given by Ms. Suzan Campbell advocated a new way – to use Retirement Planner Tool. Retirement Planner Tool is a computer program which indicates how much money you need to save in order to enjoy life after retirement. The program collects information on one’s wage, expenditure style, how many years are left to work, and so on. After processing one’s data, the program gives out guidelines which can be used to plan for one’s retirement.

#4. Hong Kong
Mc. Betty Chan introduced current pension system of Hong Kong by her presentation “Publicity and Education Programs of MPFA.” Since the population is relatively young in Hong Kong, the pension program is young and private. Mandatory Provident Fund Schemes Authority work together with private sectors in order to deliver pension program. This is called MPF JJ Five Band and the pension program is not at the governmental level. Yet, there are many projects going on such as outlining financial education at school curriculum, putting advertising posters, and throwing campaigns. She addressed that one of the successful policies was to create competition of money planning game. It shows how financial education can be done for fun.

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The symposium covered various approaches to manage the question of how to promore pension savings through education. It was such a fruitful session where many people could exchange lots of ideas and introduce solutions to each other. FSC is now putting efforts on how to deliver financial education to support pension products. Korea is in advanced economic stage, and on the edge of entering ‘old society.’ With lots of examples conveyed here, it seems to be hopeful that Korea will come up with genuine, effective measures to handle the pension issue.

Seongmin Kim

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