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50+ Europeans fear inflation erodes their pension pot, says AllianzGI

22/08/2013 14:28 (244 Day 06:23 minutes ago)

The FINANCIAL -- Many 50 to 70 year olds are uncertain if they can maintain their current standard of living in retirement, and will need to build additional savings to achieve their goals, according to  pan-European research conducted by Allianz in close co-operation with Allianz Global Investors.

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The study looked at retirement finance of 1,402 respondents, aged 50-70 years, living across seven European countries: Austria, France, Germany, Italy, Netherlands, Switzerland and the United Kingdom (UK). It found that half are uncertain if they can maintain their standard of living in retirement with many needing to build additional savings to maintain their existing standard of living. The younger respondents tended to have an altogether more pessimistic outlook. This group were particularly concerned about maintaining their standard of living due to the consequences of pension reforms and the impact of the financial crisis on their financial and pension wealth . Only 40% of 50-to-54-year-olds think they will have the same standard of living in retirement. In contrast, 53% of those aged 60-70 are optimistic or already enjoy a relatively comfortable standard of living, according to Allianz, a German multinational financial services company.

Inflation is cited as the biggest financial risk in retirement in all countries (except Austria). In Germany and UK this is particularly apparent with 60% of Germans and 65% of Britain’s citing inflation as the greatest financial concern to potentially impact their pension. However, when tested on their understanding of the effects of inflation, respondents in the UK and the Netherlands tended to overestimate and Austrians tended to underestimate its impact. French, German and Swiss respondents were most realistic about the effects of inflation, according to Allianz.

Despite some people misinterpreting the risk that inflation poses, the research showed the majority of 50+ respondents feel they are well informed about financial matters and use a wide variety of information sources.  However, while there is a wealth of information available, what matters to pension savers is its usefulness so that investors can both understand it and know how to act in response to it.

Nearly two thirds of the respondents said they are satisfied with their retirement planning, only 8% said to be dissatisfied, Swiss respondents are the most satisfied at 81%, with only 2% “dissatisfied”). The overall level of satisfaction with retirement planning is significantly lower in France (46% “satisfied” and 11% “dissatisfied”) and Italy (54% “satisfied” and 14% “dissatisfied”).

Half of Swiss respondents prefer life-long monthly or annual payments compared to only one quarter to one third in the other countries. Austrian and German prefer by far one-off lump sums (40% and 37% of the respective respondents) other the 50+ generation in other countries, according to the report.

UK respondents stand out when it comes to investment decision making. Nearly half of the respondents from the UK said that they make their own investment decisions without the assistance of an investment professional or advisor, Only Dutch respondents with 42% are nearly as self-directed in their decision making. In Switzerland the share of respondents not seeking external advice is lowest with 23%, according to Allianz.

 

 

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