Technical Details

Quantifying the Pensions Gap


The methodology employed to quantify the pensions gap is based on bottom up analysis of the following countries: Czech Republic, Germany, Spain, France, Hungary, Ireland, Italy, Lithuania, Poland, Romania, and the UK. In addition the pensions gap has been quantified for Russia and Turkey – countries that Aviva operates within - to allow comparison and analysis against non-EU27 countries.

In each case, a detailed analysis was carried out to quantify the annual retirement income gap and the capital shortfall at retirement to derive a figure for the additional savings required to meet the capital shortfall at retirement.

The heterogeneity of pensions systems across EU member states necessitates some degree of simplification to allow for meaningful cross-country analysis. Three categories were identified:

Non-pensions products that are solely used to provide retirement income are also included in the analysis under the "private DC pension" category. Only three such examples were identified:

Calculating the Pensions Gap

All values net of income tax
(1) Mandatory and voluntary schemes
(2) Excluded for the purpose of quantitative modelling. Included on a qualitative basis


The inputs for this analysis are based on a programme of secondary research conducted by Deloitte and review sessions held with country experts across Aviva. Initial analysis covered ten EU Member states covering c 80% of the EU population. Results were then extrapolated to estimate the EU-wide pensions gap.

Base case

The base case assumptions used for the purposes of this analysis are as follows:

Variable Assumption
Replacement Rates Low income: 90%; mid income: 65%; high income : 55%
Return on Savings 5% pa
Retirement Age Average age of retirement by country

Sensitivities used for the purpose of testing alternative scenarios are variations on the base case assumptions.