"The pension savings deficit in Spain is €170 billion a year, the equivalent of 18% of GDP", according to a Europe-wide study carried out by Aviva in collaboration with Deloitte.
- In Europe the deficit is €1.9 trillion per year, around 19% of GDP
- Aviva believes that there is still time to avoid most workers having to reduce their standard of living once they retire
- In its latest report, the European Commission addressed the need to find solutions which will provide a sustainable balance between private funds and state pensions
- Four out of every 10 Spaniards continue to believe that the state pension system will fully finance their retirement
- In Spain, a 40 year-old man with a net salary of €30,000 should save around €4500 a year until retirement
- Aviva has called on the Government, political parties and social bodies to work together with the private sector to look for long-term sustainable solutions.
"The pension savings deficit in Spain is €170 billion a year, the equivalent of 18% of GDP", according to a Europe-wide study carried out by Aviva in collaboration with Deloitte. This is one of the widest-reaching pieces of research into savings and pensions to date, and one of the few carried out from the viewpoint of the public.
"In Europe, the figure stands at €1.9 trillion per annum, around 19% of the estimated GDP for 2010. According to this study, Spain is one of the countries with the highest pension gap. Only Germany, Russia, the United Kingdom and France have higher pension gaps.
The study also reveals that in Spain four out of every ten people believe that the state system will cover 100% of their income needs upon retirement, compared with two in every 10 people in France, Italy, the United Kingdom or Ireland.
Over the next 40 years, 24 million people will retire in Spain, which is more than half of the current population. At the moment, savings in social provision financial products stands at €266.203 billion* and, according to this study, we should be saving at least a further €170 billion every year. In Spain, a 40 year-old man with a net salary of €30,000 should save around €4500 a year until retirement**.
In view of this information, Aviva believes that there is still time, if we take the necessary measures, to avoid most workers having to reduce their standard of living once they retire.
The report indicates that people who do not have sufficient savings put away for their retirement have to resort to other methods to face the future:
- Turning to assets other than pensions, such as shares or deposits. Aviva estimates that these assets could cover around 25% of the deficit.
- Postponing their retirement age: in some countries, it is expected that the number of retired pensioners who carry on working after the retirement age will double over the next ten years. Although postponing the retirement age until 70 would reduce this deficit by 30%, it would not solve the problem in the long-term.
- Accepting a lower standard of living than before retirement.
Similar conclusions can be drawn from the latest Green Paper on pensions published by the European Commission, which also addresses the need to find solutions which will ensure a sustainable balance between private funds and state pensions.
"These figures should serve as a wake-up call to the Government, political parties and social bodies. If we do not take urgent measures as soon as possible, people will have to considerably reduce the standard of living they were used to before retirement," says Ignacio Izquierdo, managing director of Aviva España.
"There is no magic formula and everybody will have to face up to their responsibilities. Both the Government and the private sector, as well as the public, should take stock of the problem and adopt rapid solutions. No isolated measure will resolve the situation and any legislative reforms should include a broad combination of measures to combat the current situation," continues Izquierdo.
Some of Aviva's concrete proposals are as follows:
- Europe: The creation of a European standard which will certify the quality and security of savings products. This would provide for a comparison between different products and would increase consumer confidence. Furthermore, establishing a savings objective for each country would give the governments the incentive to promote savings measures in their countries.
- At a national level: Issuing periodic reports for the public with an estimate of their retirement pension. This measure would make people realise that the state pension is just one element within a combined strategy to obtain future income, which would encourage them to take possible savings measures.
- The private sector: Ongoing work to make the range of savings and provision products on offer simpler, clearer and more reliable, which would encourage saving among the public.
- The public: Assuming greater responsibility with regard to their retirement savings and starting saving earlier. They should be aware of their current and future financial situation to ensure adequate planning.
Adopting these proposed measures should contribute towards the creation of a more secure savings platform which will help people plan the standard of living which they will enjoy once they retire sufficiently in advance.
-ends-
*Source: Inverco, Financial savings in Spanish families, 1st quarter of 2010.
**Example calculated for an average 40 year-old, according to mortality tables and current market interest rates for life annuity products. Study carried out by Aviva. Projection until retirement age at a rate of inflation of 1.8%. Assuming an accumulative interest rate of 5% per annum.
For more information, contact:
Laura Villuendas, Communications Manager, Aviva Spain
+34 91 297 18 17
Eduardo Fuentes, Grayling
+34 91 522 10 08
Note to the editors:
- Summary of the pension savings deficit for people retiring between 2011 and 2051, figures per person and by country:
|
|
| Total per country (billion euros) |
| Average Per Person (thousand euros) | |||||
| Country |
| Annual pension deficit | Annual pension deficit as a percentage of GDP in 2010 |
| Annual pension deficit (all those retiring between 2011 and 2051) | Age in 2010 | Annual pension deficit as a percentage of disposable income (all those retiring between 2011 and 2051) | ||
| 20 | 40 | 50 | |||||||
| France |
| 243.5 | 17% |
| 7.9 | 3.4 5.2 % | 5.2 | 7.5 | 32% |
| Czech Republic |
| 25.3 | 14% |
| 4.6 | 0.9 | 2.1 | 4.0 | 43% |
| Germany |
| 468.8 | 24% |
| 11.6 | 1.7 | 4.7 | 9.8 | 49% |
| Hungary |
| 9.5 | 7% |
| 1.9 | 0.8 | 1.4 | 1.6 | 28% |
| Ireland |
| 20.2 | 17% |
| 9.1 | 1.7 | 3.9 | 6.9 | 34% |
| Italy |
| 97.6 | 8% |
| 3.1 | 0.4 | 1.0 | 2.0 | 14% |
| Lithuania |
| 5.0 | 13% |
| 3.0 | 0.8 | 2.1 | 3.6 | 33% |
| Poland |
| 68.8 | 14% |
| 3.4 | 1.3 | 2.3 | 4.3 | 43% |
| Romania |
| 40.2 | 23% |
| 3.7 | 1.3 | 2.9 | 4.8 | 58% |
| Spain |
| 170.5 | 18% |
| 7.0 | 1.2 | 2.9 | 5.7 | 35% |
| United Kingdom |
| 379.0 | 26% |
| 12.3 | 1.5 | 3.7 | 7.4 | 56% |
| Russia |
| 401.7 | 27% |
| 5.8 | 1.6 | 3.7 | 6.1 | 78% |
| Turkey |
| 91.0 | 14% |
| 2.4 | 0.5 | 1.5 | 3.2 | 34% |
The deficit referred to in this study shows the difference between the income which would be needed for someone retiring between 2011 and 2051 to sustain their standard of living, and the amount of pension which they could expect to receive at the moment. As a hypothesis, it is estimated that in order to sustain your standard of living during retirement, your income should be on average 70% of your income before retirement (level used by the OECD).
- The Aviva study has been drawn up based on the hypothesis of the continuity of the current state pension systems. The deficit will vary if there are changes in the future.
- The Aviva study has three components:
- Calculation of the pension savings deficit in collaboration with Deloitte.
- Calculation of total assets other than pensions, such as shares, deposits and bonds, in collaboration with Oliver Wyman.
- Survey on people's attitudes towards savings. This survey, carried out by The Futures Company for the seventh year running, includes a global study of the opinion of consumers on investments and retirement.
To receive a copy of the Aviva study, "A significant deficit. Calculating the pension gap in Europe", visit www.aviva.es/es/corporativa/prensa/informes-y-publicaciones. If you would like to receive more information about the other countries included in the study, visit www.aviva.com/europepensionsgap.
About Aviva:
- Aviva is the sixth largest insurance group in the world. It has 53 million customers in the United Kingdom, Continental Europe, North America and the Asia-Pacific region.
- In Spain, Aviva is a key player in the life insurance and pension plan industry. It markets its products through professional brokers (Aviva Vida y Pensiones) and strategic alliances with some of the main Spanish savings banks (Bancaja, Caixa Galicia, Unicaja, Caja España, Caja Granada and Cajamurcia).
- As of 31 December 2009 Spanish turnover had increased to €2.484 billion. Over €1.8 billion worth of premiums written and contributions to pension plans totalling €657 million
- In Spain Aviva has more than two million customers.
- Visit this link www.aviva.es for more information about Aviva in Spain.