Research Reveals €1.9 Trillion European Pensions Gap

A new survey by Aviva, the UK’s second-biggest insurer, has found that the pensions gap in Europe is equivalent to 19% of the European Union’s 2010 GDP, providing evidence that unless individuals increase their saving for retirement the majority will face a seriously reduced standard of living.

(September 23, 2010) — New insurance industry research has shown that workers across the European Union need to save €1.9 trillion ($2.5 trillion) more each year if they want to retire with pensions that will maintain their standard of living.

The study by Aviva, in conjunction with accountants Deloitte, found that the UK has the largest pensions gap per person in all of Europe, with the UK’s total annual pensions shortfall of £318 billion. Germany is in second place with a shortfall of £392.7bn or £9,700 per person, followed by the Republic of Ireland (£16.9bn or £7,600 per person), France (£204bn, £6,600 per person), Spain (£142.9bn, £5,900) and Russia (£336.8bn, £4,900).

“We cannot ignore the fact that longer life expectancy brings with it new challenges for governments, individuals and industry. All relevant stakeholders should ensure that life is not just longer, but richer in every sense,” said Andrea Moneta, chief executive of Aviva EMEA, in a statement. “It’s time for a fresh approach – a partnership between the European Commission, national governments and the insurance industry to develop a stronger savings culture. Measures taken recently by national governments and the publication of the Pensions Green Paper by the European Commission are positive steps but we need more and to turn new ideas into actions quickly.

The commissioners who launched the study said the recent financial crisis has heightened pressure among retirement systems in the EU. Aviva, which sells life and general insurance in 12 European countries, said it expects people to save more with private pension providers as governments face more and more obstacles to make payouts.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href=''></a>; 646-308-2742