Europe’s retirement provisions insufficient
to serve ageing populations
26 October 2009
Long-term savings provisions in Europe are
flawed and are no longer able to meet the needs of ageing populations,
finds the Janus Capital European Consumer Finance Survey.
The study, which is the first of its kind into the European household
balance sheet, shows that there are alarming deficits in levels of personal
savings and retirement provision across Europe. While consumer hopes and
expectations when it comes to retirement age and lifestyle remain unchanged,
the collective ability to set aside sufficient funding for these aims
has fallen behind. This, Janus says, could lead to a major shortfall in
public finances.
The UK, France, Germany, the Netherlands, Spain and Italy were surveyed,
and only 63 per cent of the 6,011 European adults in these countries asked
were actively investing in savings vehicles.
Eleven per cent of savers admit they have been forced to raid these funds
as a result of the recession, and 55 per cent of potential investors were
deterred from taking out stock market investments by the effects of the
credit crunch.
Six out of ten respondents also said they were not prepared to take any
risks at all with their savings – which would need to be reversed
if there is any hope of recouping the capital lost in the downturn.
The Dutch are the most likely to be savers with 61 per cent claiming to
save a little or a lot. Just 25 per cent of Italians agreed and 32 per
cent of the UK. An average of 58 per cent of respondents believe they
have inadequate savings, which rises to 69 per cent amongst French participants,
but only 39 per cent of Dutch respondents.
The average age that respondents are planning to retire was consistent
across the countries at 62 years old. However, 47 per cent said they will
fund their retirement with some form of state provision (73 per cent in
Germany), and 36 per cent expect a corporate pension (68 per cent in the
Netherlands and 45 per cent in the UK).
Across the board, 15 per cent of adults surveyed admitted that they have
no pension provision in place.
David Bowers, joint managing director, absolute strategy research at Janus
Capital, said: “The Janus survey brings home the scale of the saving
shortfall in Europe. Hopes of early retirement remain at odds with current
attitudes toward saving and with the range of investment vehicles that
are available. There is widespread scepticism of stock-market investments,
with most people relying on traditional bank savings account to fund their
retirement.”
Ric Van Weelden, co-CEO at Janus Capital International, added: “Advance
findings from the first annual Janus Capital European Consumer Finance
Survey clearly demonstrate how our consumer finances are singularly failing
to keep step with our current long-term savings needs.
“Specifically, the report highlights how insufficient responsibility
for personal savings, risk aversion and a widespread belief that the state
will provide is fast creating a retirement time bomb for Governments and
the financial services sector will be essential is we are to reverse this
damaging trend.”
