Retirement readiness Retirement readiness –– preparing for the preparing for the future of pensionsfuture of pensions

Thurstan Robinson

1

The world is changing

Ageing populations are rising globally…

Average Life Expectancy (in years)

And the trend does not seem to be slowing

More than you may think…

True life expectancy (with future improvement) if past 10 years are indicative

Current 2050

Low Expected High Low Expected High

NL 84.7 / 86.6 92.2 / 93.7 123.3 / 127.0 88.3 / 90.0 95.2 / 96.4 157.3 / 161.5

UK 85.8 / 87.8 94.4 / 95.6 126.9 / 128.4 89.2 / 91.2 98.6 / 99.6 166.6 / 168.1

US 76.6 / 82.6 90.7 / 94.1 115.8 / 131.7 74.2 / 82.6 95.4 / 98.7 147.4 / 183.5

How long are we going to live?

……and working populations are decreasing

2 People can see change coming

Widespread pessimism about retirement

Q. How confident are you that you will be able to fully retire with a lifestyle you

consider comfortable? Source: AEGON.

46%

24%

37%

33%

23%

30%

27%

24%

21%

29%

20%

31%

16%

12%

19%

9%

12%

6%

13%

15%

20%

14%

14%

23%

25%

24%

29%

33%

31%

24%

3%

4%

2%

5%

8%

5%

7%

6%

12%

6%

Poland

Hungary

France

Spain

Germany

The Netherlands

United Kingdom

Sweden

USA

Total

Somewhat pessimistic Very pessimistic Somewhat optimistic Very optimistic

48% female and 40% male are

very/somewhat pessimistic

3 But people are not yet ready for change

Born in 1940

Pensions are

important and the

system is DB. Expects

to retire at 65 and live

for a further 15 years.

Born in 1970

Pensions have been

uninteresting. Hopes

to retire in his late 60s

and live for a further

20 years.

Born in 2000

Pensions are important.

Will learn from mistakes

of parents’ generation.

Will have fewer expectations

about retirement age, but

will live to at least 90 years.

Old habits die hard?

DB

pensions

DC

pensions Complexity for the Individual

Overall, women are less prepared for retirement

Source: AEGON.

Low 62%

Medium 33%

High 5%

Women Men

Overall, women are less prepared for retirement

Low 49%

Medium 42%

High 9%

Retirement ages not shifting despite pessimistic outlook

Q14/Q15. At what age do you think it is most likely that you will enter full retirement?/ How many years do you expect to spend in full

retirement? (all figures are medians)

65 65 65 67 66 65 67 65 65 67

20 15 17 15 16 18 16 20 20

20

Total Germany France The Netherlands

United Kingdom

Poland Spain Hungary Sweden USA

Full retirement Years in retirement

26% of respondents envisage

retiring at 65

Little variation in expected

retirement age based on

gender, age, income or

education

Source: AEGON.

4 How can companies help?

Corporate pensions are becoming more important

– State pensions cut back • Increasing pension age

• Decreasing pension payments

• Increasing pension contributions

– Employees will look to employers for support • Education

• Contributions

• Appropriate investment opportunities

‘With DC pensions, I am concerned that employees

may feel that they don’t have sufficient savings and

will look to the company to compensate them. The

issue is about delivering DC more intelligently. There

is much more to be done.’

“ ” Head of international benefits and compensation, major multinational

interviewed for AEGON Global Pensions Pensions in Europe Survey

Making a difference Have a plan, use it

• Engage and motivate

• Support employees

• Provide appropriate investment solutions

• Auto-enrol?

• Auto-escalate?

• Flexible retirement?

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Helping employees to help themselves

Every plan is a DB plan…

DB Retirement

DC Retirement

$$

$ $$

$

$$

$ $$

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Any Questions?

Contact Information Dr Thurstan Robinson AEGON Global Pensions thurstan.robinson@aegon.com www.aegonglobalpensions.com