Protection gaps in insurance for natural hazards and retirement savings in Asia

This report provides an overview of financial protection gaps that can leave individuals under-protected and put their financial well-being at risk in selected Asian countries. Throughout their lifetimes, individuals face a range of risks against which financial tools such as insurance and pensions can provide financial protection. However, they may not always be able or willing to use these protections, whether by choice or lack of available financial protection products. Two major protection gaps that have been identified globally are retirement savings and insurance coverage for natural hazards. The report also assesses the drivers and provides policy options to address them based on international good practices.

Addressing financial protection gaps in retirement savings requires a range of measures to better align the rules of the pension systems with their objectives, enhance the availability of savings and retirement income vehicles, and expand their take-up by individuals. This includes to:

• Expand the coverage of mandatory pension schemes, implement automatic enrolment for voluntary pension schemes, and improve financial incentives and financial literacy on pensions to increase participation rates.
• Align contribution levels with expected benefits and increase contribution periods, in particular by extending retirement ages.
• Provide investment choice to members with appropriate default options and improve portfolio diversification.
• Improve the portability of pension entitlements.
• Limit early withdrawals of retirement savings to exceptional hardship circumstances.
• Design payout options in line with people's needs in retirement, in particular by ensuring the availability of lifetime retirement income solutions.