May 2012

Retirement Futures
People are worried about retirement income
New research conducted by Ipsos and released by Aviva reveals that six in ten adults are concerned that they will not have sufficient retirement income to enjoy even an adequate standard of living. The Aviva Consumer Attitudes to Savings (CAS) has been conducted every year since 2004. Assessing consumer sentiment in ten of Avivas key markets across the world, the survey reveals a slightly higher level of concern across Europe and in the USA than in the Far East, reflecting the impact of the economic crisis. Within Europe, concern peaks at 69% of respondents in Poland, 66% in France and 64% in Spain. Consumers in the UK are less concerned than their European counterparts, but 57% still remain concerned that their retirement income will not meet their basic needs. Consumers in the Far East are the least worried, though even in China, where the level of concern is lowest among the 10 countries surveyed, more than half of respondents are concerned they wont have enough money to provide an adequate standard of living. Looking at the research from an age point of view, the least concerned groups are those consumers aged 55 and over and those between the ages of 18 to 24, suggesting that those close to retirement have more
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Key Findings
Six in ten adults are concerned that they will not have sufficient retirement income to enjoy even an adequate standard of living More than one in five adults (22%) across all ten countries surveyed has either not considered or doesnt know how much income they would need to get by or survive on in their retirement There is an almost universal acceptance among consumers that they will have to work beyond their desired age of retirement Higher numbers of consumers still identify a state pension as the single most important source of their retirement income over a private pension Countries in the Far East are better prepared to meet the challenges of an ageing population, with a far greater proportion of working citizens supporting their retired population.

I am worried that I wont have enough money when I retire to provide an adequate standard of living

% Agreeing

62%

60%

57%

66%

59%

64%

69%

62%

52%

59%

58%

ALL MARKETS

US

UK

FRA

ITA

SPA

POL

IRE

CHN

IND

SGP

Source: Pre-retired adults, Consumer Attitudes to Savings survey, February 2012

People are worried about retirement income

(Continued from Page 1)

confidence in the plans they have made, with the younger group being sufficiently far away from the reality of retirement for it to be such a concern. Levels of concern are highest between the ages of 35 -44 and 45-54 (65% and 64% respectively), possibly indicating a lack of confidence among these groups in the retirement plans that they have made. The response by gender indicates that women are more concerned than men (64% against 57%) about having enough money when they retire.

I am worried that I wont have enough money when I retire to provide an adequate standard of living

% Agreeing
100%

BY AGE
80% 56% 60% 61% 65% 64% 54%

BY GENDER
64%

57%

40%

20%

0%
Source: Pre-retired adults, Consumer Attitudes to Savings survey, February 2012

Large numbers are not considering future income needs

UK 30%

More than one in five adults (22%) across all ten countries surveyed has either not considered or doesnt know how much income they would need to get by or survive on in their retirement, according to the latest Aviva CAS survey. No clear pattern emerges across Europe, with the UK and Poland (30% and 29% of respondents respectively) the least considered, with Ireland and Italy (both 21% of respondents) indicating that they have the highest levels of consumers in Europe who have an idea of the level of income they would require in retirement. Responses were similarly disparate in the Far East, with Singapore recording a relatively high figure of 23% of consumers who had not considered or did not know the level of income they would require. This contrasted markedly to India, where just 7% of consumers had not given due thought to this question, and China, which also recorded a fairly low figure of 14%.

POL 29% FRA 25% US 25% SP 23% SGP 23% ITA 21%

IRE 21% CHN 14%

IND 7%

% Agreeing

I dont know or have not considered how much income I will need to get by or survive on in retirement

Source: Pre-retired adults, Consumer Attitudes to Savings survey, June 2010

Reality bites
for retirement age
US UK IRE FRA ITA

age ment

Survey results showed an almost universal acceptance among consumers that they would have to work beyond their desired age of retirement. The disparity between the desired age of retirement and the expected age of retirement was at its greatest throughout Europe and the US. In the Far East, the reality gap was more closely aligned and in India and China, consumers expected to be able to retire at approximately the age they had planned. Apart from in Poland, more than half of consumers across all countries expected to have to work beyond the normal retirement age. In the Far East countries there was a marked willingness to work beyond normal retirement, a concept that met with much greater resistance in France, where just one in four respondents wanted to work beyond the normal retirement age.

*Desired age of retirement *Expected age of retirement **I think I will have to work beyond normal retirement age **I would like to work after the usual retirement age

61 67 54% 46%

60 66 50% 33%

60 66 54% 51%

59 64 58% 25%

58 66 55% 35%

SP

POL

CHN

SGP

IND

ge ment

*Desired age of retirement *Expected age of retirement **I think I will have to work beyond normal retirement age **I would like to work after the usual retirement age

60 65 50% 46%

58 64 46% 40%

52 53 53% 65%

58 60 50% 64%

57 58 68% 74%

Source: Pre-retired adults, Consumer Attitudes to Savings survey, June 2011* and February 2012**

About Avivas Consumer Attitudes to Savings survey

Consumer Attitudes to Savings (CAS) has been conducted every year since 2004. From 2010, the survey has taken place three times a year - in February, June and November to assess consumer sentiment in Avivas key markets. A representative sample of 1,000 respondents is interviewed every wave in each country with the exception of China, where 2,000 adults, aged 18+, are surveyed. The research is conducted online in all markets except China and India, where a combination of online and face-to-face methods is used.
For more information on this document please contact: Rob Hancock Group Customer Insights Manager, Group Marketing Email: rob.hancock@aviva.com

Governments face continuing pressure over state 24% pensions

State pension
In spite of continued global economic challenges facing Governments, the survey revealed that higher numbers of consumers (24%) still identified a state pension as the single most important source of their retirement income rather than a private pension (16%).
State pension

This trend was evident in Poland, Spain, and Italy. It was most marked in China, where there is a low take-up of private pension provision due to a mandatory state system where contributions are made both by individual and employer. In half of the countries surveyed (the US, UK, Ireland, India and Singapore), respondents report that a private pension is the single most important source of retirement income rather than a state pension. However, in the case of India and Singapore, the numbers of consumers identifying private pensions as the most important source of income are relatively low, as they are reliant on a range of other investment resources to fund themselves.

16%

24%

Private pension
Percentages of respondents who identify state or private pension as their single most important source of retirement income

60 50 40 30 20

16%
Private pension

10 0

US

UK

FRA

ITA

SPA

POL

IRE

CHN

IND

SGP

Source: Pre-retired adults, Consumer Attitudes to Savings survey, February 2011

Far East best placed to support older populations

UK FRA ITA SPA POL IRE CHN IND SGP

SGP

US

IND

Latest figures from the OECD and Singstat reveal the countries which will be under the greatest economic pressure when faced with the challenge of looking after an ageing population. Countries in the Far East have much higher ratios of working individuals against retirees, giving Governments greater flexibility in terms of raising revenues to provide support services. The challenge across Europe and the US is starker and nowhere more so than Italy, where there are just three members of the working population supporting each person over the age of 65.
Source: All countries OECD 2010, except Singapore www.singstat.gov.uk Singapore figures are based on total resident population.
CHN

7.9
9.3

US

4.7
13.1

UK

3.7
16
FRA

4.9

7.9

8.2 IRE 11.4

Percentage of population over 65

16.7
ITA

3.5
3.0

5.6
Ratio of people supporting one retired person

20.5
13.5

17
SPA

POL

4.8 3.7