Tackling the savings gap: engagement and empowerment

Consumer research into integrated annual pension statements – September 2012.

Download the report: Tackling the savings gap: engagement and empowerment PDF (4.1MB).

Calls to action:

• Engage people by providing annual statements to all citizens showing a forecast of pension retirement income from all sources, in one place.
• Empower people with an interactive tool (like a pension calculator^#) demonstrating how saving more earlier in life can improve their retirement income.

Background to the research:
Pension provision across Europe is a massive challenge. Today, in the European Union (EU) more than 10% of GDP on average is spent on public pensions, possibly rising to 12.5% in 2060*. By 2060, the life expectancy at birth for males is projected to increase by 7.9 years and by 6.5 years for females compared with 2010*.

• In September 2010, Aviva published its ground-breaking research report called 'Mind the Gap' PDF (960KB). This highlighted the €1.9 trillion annual shortfall in pension provision across Europe.
• As part of that research, Aviva issued a ‘Call to Action’ to EU policymakers to support moves towards issuing regular, integrated pension statements to all adult citizens, showing state, occupational and private pensions in one single place.
• Aviva has now undertaken international research to understand the consumer appetite for annual pension statements in six EU countries.**

Research findings: Regular, concise information coupled with empowerment is crucial

Our focus groups want:

• Simple, short paper-based annual pension statement showing state, occupational and private pension in one place – with more information available online.
• The statement should link to a separate, interactive online calculator, where people can go and experiment with their contributions and projected retirement outcomes.
• The new dual-system needs to be administered independently, and be at arms-length from governments, employers and the pensions industry, so consumers have trust and confidence in it.
• There is scope to reduce the inequality of pension information provision across Europe.
• The age at which citizens receive information from the government on their state pension and the level of that information varies significantly across the EU.
• In Ireland, citizens receive state pension information at the age of 60 years old, whereas in France it’s at 35 years old and in Sweden it’s from, the age of 18 years onwards.

The Swedish model shows regular pension statements can improve awareness and financial literacy

• Sweden has improved financial literacy and awareness of pensions through its Orange Envelope scheme, where state pension statements are sent annually to its citizens.
• In the period 1999 to 2011, general pension savers saw a strong increase in knowledge of the pensions system.
• There was a rise over the period from 32% to 49% of respondents saying they understand the system.***
• From 2007 to 2011, new pension savers’ confidence in the state pension system increased from 48% to 62%.***

*European Commission 2012 An Agenda for Adequate, Safe and Sustainable Pensions PDF (304KB)
**Markets chosen due to significant Aviva presence
***Swedish Pensions Agency Survey 2011.

Practical next steps:

• The European Commission could initiate a scoreboard to monitor the quality and transparency of pension information in the Member States.
• The European Commission could conduct a cost/benefit analysis to quantify the economic benefits of positive savings behaviour change caused by the receipt of integrated, annual pension statements.
• Relevant policy-makers could conduct feasibility studies by the end of 2014 to look into the provision of integrated pension statements every year to their citizens – building on Sweden’s model.

# Aviva pension calculators
For our research we used a pensions calculator created by our Irish business to demonstrate online capability. We also have pension calculators in each of the six markets the research was carried out:
Ireland
UK
Spain
Poland
Italy
France

Download the Download the report: Tackling the savings gap: engagement and empowerment PDF (4.1MB). PDF (4.1MB).