Spain: The volume of contributions to pension plans in Madrid only represents 0.73% of the GDP of the community

• The average loss of purchasing power after retirement of the inhabitants of the community stands at approximately 40%².
• There are 674,500 persons in the region close to retirement age³. 
• Trust in the State pension as a major source of financing retirement is different between Spanish people over 55 years of age (71%) and young people between 18 and 34 years of age (55%).

The volume of contributions to pension plans in Madrid approximately 0.73% of the GDP of the community at current prices, according to calculations made by the Aviva Savings and Pensions Institute from the latest published official figures¹. The average annual salary in the community amounts to €25,861 and the average annual pension amounts to €15,435. In view of this, the average loss of purchasing power in Madrid after retirement stands at approximately 40%².

The Aviva Savings and Pensions Institute has carried out pioneering research comparing the motivations and prospects as regards pensions and long-term savings among two very different age groups in Spain: persons over 55 years of age who have not yet entered retirement, and young people aged between 18 and 34 years.

Amador Moreno, director general of Aviva Life and Pensions, highlights that “the Generations study offers important figures which can be extrapolated to the actual situation of pensions in Madrid, where there are approximately 674,500 persons approaching retirement age³ and almost 1,600,000 young persons³ who will be affected by the new situation of the pensions system in Spain”.

He also considers that “it is important for both young people in Madrid and those approaching retirement to be able to detect what will be their economic necessities and take further savings measures to address them 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

For more information on this report and the findings from other Spanish regions visit the Aviva Spain website

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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.  www.aviva.es/