Spain: The volume of contributions to pension plans in the Balearic Islands alone represents 0.54% of the community's GDP

• The average loss of purchasing power among residents of the community after retirement is around 44%².
• There are 117,500 people close to retirement in the region³. 
• Confidence in the state pension as the main source of income in retirement differs between Spaniards over 55 (71%) and young people between 18 and 34 (55%).

The volume of contributions to pension plans in the Balearic Islands represents around 0.54% of the community's GDP at current prices, according to the calculations made by the Aviva Institute for Savings and Pensions on the basis of the latest official published figures¹. The average annual salary in the community amounts to €21,070, with an average annual pension of €11,748. As a result, the average loss of purchasing power among Balearic residents after retirement is around 44%².

The Aviva Institute for Savings and Pensions has conducted a pioneering study comparing the motivations and views in terms of pensions and long-term savings of two very different age groups in Spain: people over 55 who have yet to retire and young people aged between 18 and 34.

Amador Moreno, CEO of Aviva Vida y Pensiones, emphasises that “the Generations study offers important data that can be extrapolated to the reality of pensions in the Balearic Islands, where there are around 117,500 people close to retirement age³ and more than 285,000 young people³ who will be affected by the changes to the pension system in Spain”.

He also thinks that “it is important for the young people of the Balearic Islands and people approaching retirement alike to determine what their financial needs will be and to make additional savings to meet those needs and maintain their standard of living.” 

Main conclusions of the “Generations” study

People “close to retirement” (over 55 years old and yet to retire)

• 71% expect the state pension to help them finance their retirement, which makes it the most common source of funding in the country.
• Four out of 10 Spaniards believe that they will need 100% of their income to live comfortably during their retirement. But three out of 10 do not know or have not thought about the amount that would make this possible.
• Spaniards of this age are the least willing to work beyond retirement age compared to other European countries, and those who attach the greatest importance to health as a priority in their lives.

Young people between 18 and 34

• 55% believe that their main source of finance for their retirement will come from a state pension, while 37% expect to rely on private pension plans. 50% believe that funding will come from other forms of savings.
• Nearly four in 10 of those polled in Spain believe that they will need 100% of their monthly wage to enjoy a good standard of living in their retirement. Meanwhile, six out of 10 fear that they will not be able to save enough to survive once they retire.
• Young Spaniards of this generation are the most concerned in Europe about their career prospects and their chances of finding a job (59%), according to data from the study.

Major recommendations of the Aviva Savings and Pensions Institute:

• To facilitate the acquisition of complementary savings products: by means of a full review of tax incentives for pension contributions, and by testing the efficiency of existing plans.
• To generate a framework of action in terms of quality and quantity: by creating a European standard that allows suppliers to demonstrate the quality of their products, facilitate their comparison and enhance consumer confidence. 
• To establish a European pension savings target that could vary according to the country and be calculated as a percentage of the GDP or by means of distribution through the three pillars.
• Collaboration between public and private spheres. 
• To promote a savings culture by improving financial literature and providing an annual consolidated pensions report for all subscribers, giving the man in the street an estimation of what his future benefits will be.

Methodology of the “Generations” study

These figures were obtained from the “Generations” study undertaken by Aviva at The Futures Company in 2010. The Global Monitor study was carried out in seven countries and was complemented with two waves of the CAS (Consumer Attitudes to Savings) developed in five countries. The countries included in the study are: Ireland, France, Italy, Spain, Poland, Turkey* and Russia* (*the latter figures are excluded from the CAS study).

The study analysed the replies of 8,709 participants in two different generation sections in Ireland (1,571), France (1,265), Italy (1,354), Spain (1,522), Poland (1,461), Russia (890) and Turkey (646).

The analysed groups are the Generation AND with ages between 18 and 34 years (6,197 participants), and those Approaching Retirement, over 55 years of age not yet retired (2,512 participants).

¹ Figure taken from the calculation of pension plan contributions of the latest published statistics on taxpayers under the IRPF (Personal Income Tax) scheme (Total 2009, AEAT (Spanish State Tax Administration Agency)) and the figures of the INE (National Statistics Institute) related to the GDP for each Autonomous Community (2009).

² Estimate completed from the figures of the Annual Survey of salary structures (CNAE (National Classification of Economic Activities) 2009), series 2008-2009 of the INE, and the latest published figures on the average monthly pensions of the Ministry of Employment and Immigration.

³ Figure taken from the latest Municipal Register completed by the INE in the year 2010.

Read the full report Generations report PDF (758KB) - note this PDF is in Spanish

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For further information please contact:
Maribel Alonso Francisco
Telephone: +34 91 556 01 54
Email: maribel.alonso@edelman.com

Laura Villuendas
Telephone: +34 912 971 817 / +34 696 576 921
Email: laura.villuendas@aviva.es

Noted to editors:

Aviva is the sixth largest insurance group in the world, and is the leader in the international market of insurance and long-term savings products. In Europe, it leads in the life insurance and pensions market.
 
Aviva in Spain is one of the leaders in the life insurance and pensions sector. It trades its products through professional brokers (Aviva Life Vida and Pensions) and by means of strategic alliances with some of the major Spanish savings funds (Bancaja, Caixa Galicia, Unicaja, Caja España, CajaGRANADA and Cajamurcia) and banks such as Banco de Valencia.  http://www.aviva.es/