Indians still believe in saving and investing regularly for future, however according to a trend analysis done by Aviva, over the last four years, shows that there has been a growth in expenditure vis-à-vis savings.
- A breakthrough research shows that 57% of pre-retired Indians think that they will have to work beyond their normal retirement date to fund their retirement, a steady rise from 40% in 2004
- 45% of Indians still don't know where to seek financial advice and just over a half admit that they don't really understand about "pensions, savings policies and things like that"
- Launches www.six-steps.in, to provide free, unbiased advice on retirement planning
- Survey highlights that making provision for family (protection and education) and healthcare are key concerns for Indians today.
Indians still believe in saving and investing regularly for future, however according to a trend analysis done by Aviva, over the last four years, shows that there has been a growth in expenditure vis-à-vis savings. The survey titled "Consumer Attitude towards Savings" displays that while Indian consumers still consider savings important but due to booming economy, there has been a steady increase and people prefer spending to saving.
Lack of good advice is a key deterrent to savings, along with perceived lack of choice, and of course, around 20% saying they just can't be bothered, more than twice as much as the global average score.
57% of Indians are happy to have a short-term debt to allow them to have a higher spending power than their 40% global counterparts. However, compared to other economies such as some Southern European countries, and Russia, India still continues to be favourably inclined towards savings.
Aviva partnered with Henley Centre Headlight Vision, the strategic research consultancy to conduct this annual global survey, which has covered 80,000 people over four years, and 24 countries in 2007. India has been a part of this survey since inception in 2004 and, the study surveyed representative samples in key metros - Delhi, Mumbai, Kolkata, Chennai and Bangalore each year.
Speaking at the launch, Bert Paterson, managing director & CEO, Aviva India, stated: "It is heartening to find that Indians continue to save keeping the future in mind. While there might be an abrasion in the near term, over a longer term horizon ‘Savings' does play a very important part in their lifestyle. However, it is important to note that while savings is important, retirement planning is a serious issue. Our research highlights that while Indian consider investment in property and our savings tools, structured investments in retirement is not yet being given due consideration."
He added: "As per the study, close to 40% of Indians look at the internet for advice on financial planning. This is an impressive figure for internet take up in a fast developing economy. We can expect this to rise in the future too.
"We launched Six-Steps in the UK last year and the site has been a huge success and garnered a lot of industry support. India is the first business unit to adopt the site and launch it. Six-Steps is an independent website that will promote financial literacy. The objective is to help people take informed decision on their retirement planning. The website will also work as a guide book, with financial experts providing professional advice."
Key highlights of the survey:
- Indian consumers understand the importance of saving regularly (42% compared to global average of 35%) however the research shows that booming economies tend to drive spending rather than saving (40% of Indians state that they prefer spending rather than saving, compared to 28% globally)
- When it comes to reasons for saving, family and healthcare are particularly important savings motivations, while lack of choice and advice are important barriers to savings, as well as simply not being bothered
- Indians are increasingly embracing risk, driven by the healthy economy, (24% of Indians state that they are more prepared to take financial risks than they were five years ago, compared to 18% globally) and demonstrated by a strong trend toward higher performance potential products (preferred by 24%) and away from lower guarantee style products (preferred by 12%). Globally, the situation is the opposite with 19% opting for performance potential, and 31% for guaranteed rates of return
- When it comes to trust, across the board, Indians are more likely to trust companies and institutions to be honest, and show much higher levels of trust than the global average. This is particularly strong for the press too.
- In financial services, insurance companies attract higher levels of trust than other types of institution, and this is rising for all types too. (While 84% of Indians trust insurance companies to be honest and fair, the figure is 32%)
- India has higher levels of interest in finances than the rest of the world (42% vs 31%) yet the majority admit that they feel that they don't understand pensions and savings, (52% vs 26%) and don't consider themselves to be great planners, compared to the rest of the world (50% vs 38%)
- Many Indian consumers do not know where to find independent information, at a level much higher than the global average, (45% vs 27%) and turn to their informal networks - friends and family rather than professionals for financial advice (62% think it better to turn to friends and family, while 33% state banks and financial advisers)
- This is beginning to get through to the pre-retired - there are signs that concern and worry about retirement are leading to higher levels of action 57% of pre-retirees think they are going to have to work beyond their normal date of retirement to fund their retirement (up from 40% in 2004) and 59% state that they are taking steps now to ensure they have an adequate level of income during my retirement.
Six-Steps takes people through six simple steps towards planning a secure and financially healthy retirement:
Step 1 - Take control - where in you take charge of the finances to plan ahead
Step 2- Know yourself - to find out all about money and risk taking appetite
Step 3 - Save little and often - so that one consistently saves for long term benefits
Step 4 - Invest for the future - via various long term investment options
Step 5 - Protect yourself, and - the money earned, family and future essential needs
Step 6 - Get advice - from a financial adviser in order to implement saving plans
Aviva has conducted extensive research, which has shown that people across the globe seek advice before taking financial decisions. Six-Steps aims to educate people on the right way to financial planning. The website is designed such that it is user friendly and easily accessible.
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For further information, please contact:
Pooja Garg Khan
Aviva Life Insurance
Phone: 0124- 2709082
E-mail: pooja.khan@avivaindia.com
Shubhada Dharwadkar
Adfactors PR
Phone: 011 - 26930132 -39
E-mail: shubhada.dharwadkar@adfactorspr.com
Notes to editors:
About Aviva India
Aviva Life Insurance is a joint venture between Dabur and Aviva. Current paid up capital amounts to 758 crores. Dabur are the 74% shareholder and Aviva the 26% shareholder. Aviva plc is the UK's largest insurance group and the world's oldest insurance group, with a history dating back to 1696. Today, it is the fifth largest insurer worldwide, with 40 million customers and £377 billion assets under management. Prior to nationalization, Aviva was the biggest of the foreign insurers operating in the Indian market.
Founded in 1884, Dabur is one of India's oldest and largest groups of companies with the group's consolidated annual sales in excess of Rs 2,233 crores. A professionally managed company it is the country's leading producer of traditional healthcare products.
Aviva pioneered the concept of Bancassurance in India, and has leveraged its global expertise in this area successfully in India. Bancassurance has been contributing close to 60% of the total sales of Aviva India. Through its branches and its Bancassurance partner locations, Aviva products are available in more than 1,600 towns and cities across India.
Aviva's products have been designed in a manner to provide customers flexibility, transparency and value for money. We have been among the first companies to introduce Unit Linked products in the market.
Aviva has a unique need based sales approach through the "Financial Health Check" (FHC). The FHC is a free service administered by our FPAs (Financial Planning Advisers) for a need-based analysis of the customer's long-term savings and insurance needs. Depending on the life stage and earnings of the customer, the Financial Health Check assesses and recommends the right insurance product for them.