Life Aims: Germany, France, Italy and Spain

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How do people in Germany, France, Italy and Spain think about satisfaction with their life and financial planning? The Allianz study examines personal life aims in the different countries and …

How do people in Germany, France, Italy and Spain think about satisfaction with their life and financial planning? The Allianz study examines personal life aims in the different countries and identifies commonalities and differences.

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  • 1. Peoplein Germany,France, Italyand Spain.Life Aims II, 2005.
  • 2. Index.Editorial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3About the Life Aims II study. . . . . . . . . . . . . . . . . . . . . 41 Background information on the countries in the study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.1 Demographic development. . . . . . . . . . . . . . . . . . 51.2 Economic situation. . . . . . . . . . . . . . . . . . . . . . . . . 61.3 Social security systems and reforms. . . . . . . . . . . 91.4 Media and public opinion. . . . . . . . . . . . . . . . . . . . 122 Results – Comparison of countries. . . . . . . . . . . . 132.1 Life aims: Savoir vivre or a good education. . . . . 132.2 Satisfaction with life: Spaniards lead the field. . . 142.3 Long-term financial planning and personal provision. . . . . . . . . . . . . . . . . . . . . . . . . . 162.4 Expectations of financial service providers. . . . . . 17 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Results – The situation in Germany. . . . . . . . . . . . 203.1 Life aims: Good education most frequently cited life aim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203.2 Satisfaction with life: Satisfaction depends on achieving life aims. . . . . . . . . . . . . . . . . . . . . . . . . 233.3 Long-term financial planning and personal provision: in their infancy. . . . . . . . . . . . . . . . . . . 253.4 Expectations of financial service providers: Trust rather than competence? Trust and competence! 26 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 Results – Specific demographic groups in Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.1 Young adults (18 –25 years). . . . . . . . . . . . . . . . . . 274.2 From people starting a family to the “sandwich generation”. . . . . . . . . . . . . . . . . . . . . . 294.3 50-plus generation. . . . . . . . . . . . . . . . . . . . . . . . . 31Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33I Study objectives and methodology. . . . . . . . . . . . 33I.1 Methodological approach. . . . . . . . . . . . . . . . . . . 33I.2 Rating scale used. . . . . . . . . . . . . . . . . . . . . . . . . . 34I.3 Type of analysis used. . . . . . . . . . . . . . . . . . . . . . . 34II Macro-economic data for the four countries Germany, France, Italy and Spain. . . . . . . . . . . . . 36II.1 Demographic development. . . . . . . . . . . . . . . . . . 36II.2 Economic situation. . . . . . . . . . . . . . . . . . . . . . . . . 36II.3 Social security systems: Organization of pension systems. . . . . . . . . . . . . . . . . . . . . . . . . . . 37III Survey results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Imprint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
  • 3. Life Aims II, 2005: Editorial.Editorial.Dear Readers, This new Life Aims study is a continuation of our research first embarked upon whenAs we grow up, each and every one of us Allianz carried out its first study of the lifedevelops life aims which influence how we aims of people in Germany in 2004. Thislive our lives. These may change a little over time we have cast the net wider to take intime, depending on what turns life takes, the views of people living in a further threebut as a rule they are a stable framework European countries. Thus our study haswhich we depend on to guide us through become more international, and the result-life. This study explores these life aims and ing comparisons have been illuminating.how people feel about them at this moment In addition, the methodology of the studyin time. has been honed so that we are left with a detailed snapshot which reveals the deep-Germany, Italy, France and Spain have rich seated opinions, desires and hopes of peopleand diverse cultures, so it was no surprise in our core European markets.when the survey showed that the four popu-lations have different opinions regarding The findings contain an important messagewhich life aims are most important. Yet, this to policymakers. They must continue tostudy shows something else. The countries encourage people to take responsibility forare all linked by one common denominator; setting up their own personal provisionrespondents in all four said that achieving plans for the future. Policymakers must alsothe life aim of being financially well pro- give people the necessary financial freedomvided for in old age makes them feel most to do this so that they can build up a supple-uneasy. If they analyze how satisfied they mentary pension secured by capital stock.are with their lives right now, they recog- The baby-boomers of the late fifties andnize that they have not yet done enough to sixties have little time before they reachachieve this aim, and it is becoming more retirement age.and more evident to them that it will remainunachievable if they rely on the state pen- To achieve the life aim of “financial indepen-sion alone. dence in old age”, people need and are seek- ing professional advice and help. Allianz hasNowadays, the reasons for this are well always seen itself as a business partnerknown. Birth rates have been falling for which helps its customers to solve theirmany years and medical advances have led financial dilemmas efficiently. As this studyto increased life expectancy. Consequently, shows, the challenges have become biggerthe state pension systems in their current and not smaller. This motivates us evenpay-as-you-go form, funding expenditure further to listen to our customers attentivelyfrom current contributions, are being sub- and wherever possible to offer them a com-jected to a test of strength. Clearly, they prehensive solution which is transparent andcannot pass this test. The writing is on the flexible enough to adapt as people’s situa-wall – reform is inevitable. tions change. Best regards, Michael Diekmann CEO of Allianz AG 3
  • 4. Life Aims II, 2005: About the Life Aims II study. About the Life Aims II study. • Whether the intensive discussion about old-age provision in the German political Does money make people happy? What is the link arena and in the German media has led between long-term financial planning, personal to greater changes in the knowledge and provision and life aims? attitudes of people there than in the other three countries. • Whether the shift in attitudes which seemed to have begun when Life Aims I was carried Allianz conducted the Life Aims II study to out has also led to changed behavior con- discover to what extent people living in cerning personal provision, and if not, why Germany, France, Italy and Spain believe not. that satisfaction with life, life aims and • Whether these developments have also financial planning are interlinked. What resulted in changed expectations of financial kinds of life aims have the greatest effect on service providers, and if so, what the expec- how satisfied people are? What importance tations are. do people attach to achieving particular life aims and how likely do they think it is that Our analysis of the study brought to light a they will achieve those aims? And what role whole range of intriguing differences, not does their financial situation play in all of only between people living in different coun- this? Allianz commissioned Nuremberg tries, but also between those in different age market research institute GfK to design and groups or at different stages of their lives. carry out the study. For example, people with young families are the most satisfied with lives, although they The first Allianz Life Aims study, published generally have little disposable income. in January 2004, polled only people living However, when we look carefully at this in Germany. By contrast, the Life Aims II group we can see that the extent to which survey, conducted between June and August they have planned their finances has clearly 2005, included a further 1,000 people in influenced the extent to which they have each of the countries France, Italy and been able to achieve their life aims and by Spain. default also affected how satisfied they are (more analysis of the results from Chapter 2 We wanted to know: onward). • How prepared people in these four countries are for a demographic change which is set to This document summarizes and presents push the current pay-as-you-go financed the most important results in the chapters social security system to its limits. entitled “Results – Comparison of countries”, • What people think about the reforms which “Results – Germany”, and „Results – Specific are necessary and about the changes to how target groups”. The special chapter entitled responsibility for social welfare is divided „Background information on the countries between the state and themselves. in the study” contains a brief synopsis by Allianz economists of the demographic, economic, political and media climates of the four countries where the survey was carried out. Further information on this can be found in the Appendix and at www.allianz.com/lifeaims.4
  • 5. Life Aims II, 2005: Background information on the countries in the study.1 Backgroundinformation on the countriesin the study.More than ever before, the lives of people inthe countries where the study was carriedout are influenced by the changing socio-eco- The populations of the four European countriesnomic landscape. The demographic change Germany, Italy, France and Spain will age dramaticallydue to take place over the next few decades and shrink in the next few years. The countries mostwill upset the delicate balance between the affected by this are Italy and Germany, with Spainnumber of people in gainful employment following suit somewhat later. In all four countries,and the number of those receiving pensions. the demographic change will create an intolerableAt the same time, the difficult economic sit- burden on social security systems which are currentlyuation is reducing the scope available to pol- funded primarily from current contributions on aicymakers to implement sustainable reformof the social security systems. In this period pay-as-you-go basis.of rapid change, the media pay a key role indisseminating information. ed to more than six. In Germany the popula-In order to get a better picture of how tion pyramid is currently very similar, butcrucial an influence socio-economic factors its population will age less quickly than thatactually are, we analyzed the current of Italy; in 2050 there will be five retiredsituation in all four countries. persons for every ten in gainful employment.1.1 Demographic development. Table 1: Dependency ratio today and in 2050: Number of over-65s per 100 persons agedThe best measure of demographic develop- between 15 and 64.ment is known as the dependency ratio, 2005 2050which is defined as the number of peopleaged over 65 divided by the number of Germany 28.5 51.0employable people aged between 15 and 64. France 25.0 51.4In all four countries, this ratio will deterio-rate considerably. While there are currently Italy 29.7 63.2still more than three people in gainful Spain 24.5 55.1employment for every person in retirementin Germany and Italy and indeed four in Source: National statistics officesFrance and Spain, in all four countries thisratio will fall to less than two people in The current population pyramids of Spainemployment for every person in retirement and France are slightly less top heavy, asby 2050 (see Table 1). both countries have dependency ratios of approximately 25 percent. However, theHowever, the extent to which the countries demographic change will also cause these towill be affected by these changes varies. Italy rise considerably. Spain in particular willwill be the vanguard of ageing populations. experience considerable change. In 2050,While today there are only three persons in Spain’s population will be one of the oldest,retirement for every ten persons in gainful second only to Italy. By contrast, populationemployment, by 2050 this will have increas- aging will be slightly less dramatic in France, 5
  • 6. where the dependency ratio in 2050 is likely demographic change makes it impossible for to be similar to that of Germany. pension policymakers to continue “business as usual”. In all four countries, increasing longevity and a fall in birth rates are the principal rea- Table 3: Birth rates in 1965 and today. sons for the predicted demographic age shift. 1965 Today Life expectancy at birth is around 77 years for males and 84 years for females in all the Germany 2.5 1.4 countries, which means that in the last 40 Italy 2.7 1.3 years life expectancy has risen by about ten years (see Table 2). This trend is expected France 2.8 1.9 to continue in the next few years, indeed Spain 2.9 1.2 demographers expect life expectancy to increase by a further four years in the next Source: National statistics offices 30 years. 1.2 Economic situation. Table 2: Life expectancy of males and females at birth (years). Germany. In the last ten years, Germany’s economy 1960 Today has grown markedly more slowly than those Males Females Males Females of its European neighbors, with annual Gross Domestic Product (GDP) growth regularly Germany 66.9 72.4 75.6 81.3 below the European average since 1995. France 66.9 73.6 76.7 83.8 There are many reasons for this weak growth: German reunification, the loss of Italy 67.2 72.3 77.8 83.7 competitive advantage on the international Spain 67.4 72.2 77.7 84.0 market as a result of excessive wage rises in Source: National statistics offices the early nineties, and a somewhat inflexible labor market. However, the fall in birth rates has been even steeper than the increase in life Nevertheless, the extremely unfavorable expectancy. While 40 years ago the average economic situation Germany has suffered number of children per woman was well since 2002 detracts from some important above the figure of 2.1 needed to maintain positive changes which have taken place in the population level, birth rates in all four Germany. Many companies have hugely countries have now fallen below that. Ger- increased their competitiveness, a develop- many, Italy and Spain have very similar birth ment reflected in the fact that Germany now rates of between 1.2 and 1.4 children per exports more than any other country in the woman, but in France the birth rate is quite world. Restructuring and consolidation have a lot higher at 1.9 (see Table 3). driven down costs and increased profits. The negative effect of this unfavorable situation, Thus the demographic pressure on social however, is that private consumption is security systems is high in all of the coun- weak. This, coupled with the structural tries. Forecasts of how the age structure will crisis in the construction industry, continues develop based on life expectancy and birth to hold back domestic demand. rates are relatively precise. If anything, the speed of medical progress and the accompa- Due to this weak domestic demand, lower- nying increase in life expectancy has been ing the unemployment rate which currently underestimated up to now. And even if birth stands at 11.2 percent will be a slow process. rates recovered, the effects of this would not If we apply the rule of thumb that growth be felt immediately, as many years would of over one percent is needed to create pass before the “extra children” reached additional jobs, then regular employment working age. It is thus quite clear that the will increase only gradually.6
  • 7. Life Aims II, 2005: Background information on the countries in the study. Public finances are already stretched, and further belt-tightening is necessary if Germany is to conform to the Maastricht Economic growth in Germany, France and Italy has criteria. Quite rightly, consolidating public been unsatisfactory in recent years, and as there is no finances is seen as an important goal of the indication that this trend will be reversed. Receipts new government. from social insurance contributions will continue to be to be insufficient, making reform of the social In the coming years it seems extremely likely security system even more inevitable. At the same that the economic situation will improve. time, however, the disposable incomes of private However, it is important to realize that households will rise only marginally, so that as far as miracles do not happen overnight; annual GDP growth of 1 to 2 percent seems realistic their finances are concerned, many people will be in the medium term. extremely limited. The positive exception to this trend is Spain, which thanks to its balanced public budget is France. enjoying not only a good economic situation but also Although the French economy has been on a healthy social security system. the road to recovery since about mid-2003, this year’s real rise in GDP is only expected to be a modest 1.5 percent or thereabouts. One of France’s main problems is high in labor market policy. Any improvement in unemployment, which the de Villepin employment brought about by a healthier government has said will be uppermost on economy is likely to be gradual at best. its agenda. The number of people in gainful employment has been stagnating for quite Public finances are another weak point. Last some time now, and although the unemploy- year the deficit ratio was 3.6 percent, and ment rate recently fell below the 10 percent this year and next year too it is forecast to mark, thus appearing less ominous, this be above 3 percent. Thus France is unlikely seems to have been primarily due to changes to be able to meet the Maastricht criteria Dr. Michael Heise, thus making them accessible to everyone, what- Chief Economist of Allianz Group and ever their income bracket. Dresdner Bank • Capital-secured nursing care insurance should be introduced gradually via a mixed model. Supple- In the next few years the new German government mentary private care insurance plans secured by needs to address the task of adapting the social capital stock would allow a greater range of care security system to the new demographic reality, so services to be provided and would also permit it is good that the issue of increasing the state social insurance contributions for nursing care to pension age has already been raised. Together remain at their current level. with measures to boost growth by increasing the productivity and employment rates, this will be • In health insurance, too, the financial situation key in helping to lessen the burden on the social could be stabilized by moving certain blocks of security system. services from the sphere of pay-as-you-go financed health insurance into a capital-covered However, these stabilization measures will not be system. Examples of areas which could be enough. In order to make the German social secu- removed are dental treatment and dental prosthe- rity system future-proof, a far greater percentage ses, accidents which are not work-related and of old-age provision must be secured by capital sickness benefit. stock: What policymakers must not lose sight of whilst• As far as capital-secured pensions are concerned it discussing reform of the social security systems is is not a question of introducing new products, but that we are running out of time, because due far more one of making the existing products more to our demographic situation we only have some attractive, making it easier to access state aid and 15 years to build up the necessary capital stock. 7
  • 8. and a balanced budget remains but a future Spain. dream. The Spanish economy continues to enjoy strong economic growth significantly above However, forecasts of economic growth are the EU average. This is primarily driven by around 2 percent for the next few years, and private demand, as rising wages and low thus close to the average of the euro area interest rates create an advantageous climate member countries. for consumption. At the same time, the con- struction industry is booming, with public Italy. investment in infrastructure continuing to In Italy as in Germany, the economy is grow- guarantee full order books. ing more slowly than the European average. The manufacturing industry in particular is However, despite a significant rise in the in crisis. Italy’s traditional export products number of people gainfully employed, the are suffering from weak sales as the technol- unemployment rate remains relatively high ogy content of these goods is low and price at 11 percent, and the labor market situation competition high. is not set to improve in the next few years. The unemployment rate in Italy thus remains Unlike the other three countries, Spain has relatively high at 8 percent. Furthermore, managed to achieve a balanced public bud- as further structural change is expected in get for several years now. The fiscal situation industry, the number of gainfully employed provides the government with the freedom persons will tend to increase more gradually to pursue an active expenditure program as than it has done so far. well as to reform the social security system. The high level of public debt, which has In the next few years, GDP growth should soared once more to some 108 percent of continue to remain strong at over 3 percent. GDP, will also continue to impede any gov- ernment attempts at implementing policies which would foster economic growth. Consequently, growth of only 1 to 1.5 per- cent can be expected in the near future, putting Italy below the average of the euro area member countries. Andrew Bosomworth, Our social security system is a financial obligation, PIMCO portfolio manager a form of debt, that is how economists see it. Their calculation is simple: if the population continues to If German policymakers try to reduce the country’s age as the age pyramid indicates it will, economic deficit by raising taxes and reducing expenditure growth remains weak and social insurance expen- alone, without tackling the causes of the deficit by diture remains at the same high level, debt will reforming the labor market and reducing red tape, rise further. According Standard & Poor’s and the they will be making a mistake. Until the employ- World Bank, by 2050, this debt could be 200 per- ment problem is resolved, the deficit will continue cent of Gross Domestic Product (GDP). Such a to expand. They need to reverse the order of high level of debt would make German govern- priority in which they do things by implementing ment bond issues as good as worthless. The Ger- reforms first and accepting that these will lead to a man pensions authority should include this calcu- budget deficit. Once reform has taken place, the lation in the letter it sends out to the population growth which is needed to improve public about how much pension they will receive. finances will come, just as it did in the United States and Great Britain at the end of the 1980s.8
  • 9. Life Aims II, 2005: Background information on the countries in the study.1.3 Social security systemsand reforms. The demographic change in Germany, France, Italy and Spain will affect the future stability of pay-The social security systems of all four coun- as-you-go social security systems, both healthcaretries are pay-as-you-go systems, meaning systems and pension systems.that the contributions of those currentlypaying social security contributions are usedto cover current expenditure on pensions,healthcare and nursing care. prehensive than it was in Germany, so there was correspondingly less need for peopleIn all four countries, people are provided to get to grips with personal provision plans.with a high standard of medical care and a The income threshold for state pensionscomprehensive range of healthcare services. there, for example, is a good 30 percentHowever, state healthcare systems will be higher than in Germany, meaning that theconfronted with serious problems in the group of people with higher earning powerfuture. The demographic change of the next who are above the threshold is muchfew decades, the continuing advances in smaller. In Italy, self-employed people aremedical technology, rising prices for health- also covered by the state pension system,care services and the accompanying rises in whereas in Germany the self-employed arecontribution rates will soon threaten to responsible for their own old-age provision.overload the state pay-as-you-go systems. In addition, in Italy the transition periods for the reforms already passed are very long.Where pensions are concerned, for years It is thus perfectly conceivable that unlikepeople living in the four countries included people in Germany, most of the Italian popu-in the study could be sure that when they lation are not particularly aware of howretired they would receive a pension which much the reforms will effect their personalwould almost completely secure their stan- situations.dard of living; on entering retirement theywould receive approximately 70 percent or Germany.more of their final salary. Pension adjust- The amount of money in the German socialment was usually in line with the develop- security purse is worrying. In addition to thement of wages, so everyone could see people demographic shift, high unemployment andaround them who were older than them- the consequent reduction in the number ofselves continuing to live well and share in gainfully employed persons obligated to payeconomic progress. social insurance contributions are the main causes of the difficult financial situation. InAs the countries are currently in different order to stabilize the situation, the Germanstages of pension reform and have different government has recently implemented twosocio-economic conditions, the awareness quite substantial reforms.of how necessary it is to make personalprovision for the future varies. In Spain in As part of the pension reform of 2001, theparticular, the fact that the economy is pension formula was adjusted. The effectcurrently flourishing is tending to mask of this reform is a long-term reduction inlong-term problems. Since there is also little the average gross state pension level fromdiscussion on pensions in the political arena 48 percent today to 41 percent in 2030. Toat present, the population still has scant cushion the effect, this adjustment wasknowledge of the problem. accompanied by the introduction of the Riester pension on January 1, 2002, whichThe different historical contexts also lead to provides state subsidies depending on thedifferent perceptions. In Italy, the social number of family members and the marginalsecurity system was traditionally more com- tax rate. 9
  • 10. As a result of the 2004 pension reform, the Payments from the two schemes amount to amount of tax charged on pensions is gradu- approximately 75 percent of the person’s ally changing, and pensions will eventually final salary. In total, some 51 percent of the be fully taxable by 2040. At the same time, income in a retired household is from a subsidies for payments into pension plans state pension, 34 percent is from a company were introduced. In order to further encour- pension and 15 percent from personal provi- age people to take out pensions secured by sion. As reforms were implemented fairly capital stock, the basic pension (Basisrente recently, there are no reforms planned in the or Rürup Rente) was introduced. Contribu- immediate future. tions to this are seen as special expenses and as such are tax deductible. This year the Italy. maximum amount which can be deducted The state pension system in Italy is also a from tax is 12,000 EUR, but the figure will compulsory pension scheme financed by rise to 20,000 EUR in 2025. pay-as-you-go tax contributions, with a state pension age of 65 for men and 60 for In Germany there are now numerous old-age women. Anyone who has paid contributions provision products secured by capital stock. for at least 20 years has the right to draw a Traditional life insurance products have state pension, although to receive a full pen- been joined by the Riester pension and the sion the person must have contributed for basic pension, known as the Rürup pension, 40 years. The amount of pension received and there are also several ways of organizing depends on how long the person has paid pensions through companies. However, the social insurance contributions for and when amount invested in these products is still they began to make those payments. In the small in comparison to the state pension. future, people who have been contributing since January 1, 1996 or later will receive France. not the minimum pension but what is In France as in Germany, the state pension known as a “retirement allowance”. Cur- scheme is a compulsory pension scheme rently, the average household of retired financed by pay-as-you-go tax contributions. persons receives 74 percent of its income State pension payments are means tested from a state pension, only 1 percent from a and after 40 years of contributing the company pension and 25 percent from maximum amount someone can receive is private savings. 50 percent of the income threshold for contributions assessment. The minimum In Italy, the second and third pillars are pension is currently 599.94 EUR a month, hardly developed at all. The reforms in but is only paid to people over 65. Despite recent years, such as gradual raising of the this state pension age of 65, or 60 if the state pension age and the transition from person has paid contributions for 40 years, pensions based on final salaries to pensions the actual average retirement age in 2002 based on the amount of contributions paid was 58. are leading to a gradual decrease in the amount of state pension received. However, France has two company pension schemes, further reform is inevitable. One idea which ARRCO, which is open to all those in has been on the table for several years now employment, and AGIRC, which admits is converting compulsory golden handshakes only those in managerial positions. The (Trattamento a Fine Rapporto) into a pension amount of pension received is determined product secured by capital stock. However, by the level of contributions paid, which policymakers appear to be continuing to is converted into points, and the schemes are hold off implementing this. financed by contributions from employees and employers. In 2004, personal savings plans for old age were introduced. Payments into these plans are currently tax-free with a generous upper limit.10
  • 11. Life Aims II, 2005: Background information on the countries in the study.Spain. 1.4 Media and public opinion.In Spain, the state pension accounts for 92percent of retirement income, while both The media influence people’s attitudes andcompany and private pensions are uncom- opinions and are thus taking on a decisivemon. The state pension age is 65 and the role in the development and continuation ofamount of pension received depends on the modern democracies. A comprehensivenumber of years for which the person has range of information from all media sourcescontributed and the basis of assessment. enables people from all walks of life toThis is calculated from the income liable to perceive the forces which are at work incontributions which the person received society.during the 15 years directly prior to reachingstate pension age. Although it is also pos- Example – Germany.sible to draw an early pension on reaching In Germany, a strong focus on the issue ofthe age of 60, if the person does not draw a pensions both in political debate and inpension until they have reached the age of the media has raised people’s awareness of65 and after they have paid contributions for the need to make personal provision forat least 35 years, they receive an extra retirement. Between 2001 and 2004, forallowance. example, there was extensive coverage in the television news of the condition ofDespite indications that the population is the pension system in Germany. There haveaging, in Spain there is currently no debate been times when more than half of whaton implementing reform. Relatively strong was reported about the condition of Ger-economic growth and a high level of many’s social security system, particularlyimmigration are currently concealing the on the television news, concerned theproblems which demographic change will system for old-age provision. This has raisedcause. awareness significantly and the effect has lasted. (Source: Media Tenor, September 2005).Dr. Moritz Kraemer, The ideal time for stemming the tide has alreadyStandard & Poor’s Director (Europe) passed. Thus, in addition to bold reforms of the healthcare and pension systems and policiesAging populations inevitably lead to enormous which inject vitality into the labor market, swiftburdens on public budgets. Public expenditure in consolidation of public finances is paramount.Germany, for example, will have risen by over five Surpluses must be created as quickly as possiblepercent of Gross Domestic Product (GDP) by the in order to provide enough financial flexibility tomiddle of the century. prevent the country’s economy collapsing. Hypothetical Sovereign RatingsIf no sufficient measures are implemented to (based on general government balance performance).change this course of events, for example reform-ing social security systems and increasing the AAA Assuming no change inemployment rate, then public debt will spiral out AA+ current government fiscalof control. Public debt in Germany will increase at AA policies. Standard & Poor’s AA–breakneck pace as of 2025, when demographic takes a large number of A+ factors into considerationpressure starts to become unbearable, and will A when deriving sovereignhave rocketed to over 220 of GDP by 2050. There A– credit ratings. In the veryis no avoiding the fact that such a development BBB+ long-term, prolong fiscalwill lead to concern about the country’s credit- BBB imbalances tend to becomeworthiness. Its credit ratings will go into free fall BBB– a dominant factor.and investors will demand higher risk premiums,causing the budgetary black hole to implode yet 2005 2010 2015 2020 2025 2030 2035further. Germany France UK USA 11
  • 12. Media influence on public opinion.Strong focus on pensions raises awarenessof need for provision.80% 4 years ago Today 35% 30%60% 25% 20%40% 15% 10%20% 5%0% 0% 2001 2002 2003 2004 2005 % of media coverage on pensions Worry: Pensions Source: Media Tenor /Institute for Election Research, PolitbarometerExample – Spain.Since 1996, the proportion of reports onthe subject of pensions in the Spanish mediahas increased gradually. The press paysincreased attention to the subject of pen-sions when it forms part of the agenda forpoliticians and economic policymakers.In particular, new legislation and the reac-tions from important economic actors(e.g. Unespa, Bank of Spain) generate reports.Only a few articles offer background infor-mation, the majority are news reports. Themajority of Spanish media reports concernpension plans (PPA – Planes de PensionAsegurados), very few are about actualpension products. (Source: Media Tenor,October 2005).12
  • 13. Life Aims II, 2005: Results – Comparison of countries.2 Results – Comparison ofcountries.What life aims do people in these countriesreally want to achieve? Who is most satisfiedwith life? And who is financially better pre- Our perceptions of countries are cliché-ridden.pared for the future and old age? We say the French and the Southern Europeans know how to enjoy life, while the Germans are more2.1 Life aims: savoir vivre or concerned with the serious things in life. But what are people in these countries really like?good qualifications?For 80 percent of French people surveyed,“Enjoying life right now” is an important life the extent to which it has been achieved.aim, coming in only slightly behind the aim Here, there is by far the greatest discrepancyof “Having my own children”. Thus it is in all four countries.probably no coincidence that France’s birthrate of 1.9 children per woman is higher Life aims.than those of the other three countries and Having a good education/training. Question 3: Now I’dthe demographic time bomb is not ticking like to mention severalso loudly here. Germany: 88% possible personal life Germany: 66% aims. Please tell me how France: 73% important these are toIn Germany and Italy, by contrast, “Having you. France: 45%a good education” is the life aim mentioned Italy: 88% Question 3a: And tomost often. In Spain, this aim is only Italy: 43% what extent would younarrowly beaten into first place by the aim say you have been able Spain: 88%of “Living healthily”. The economic situation Spain: 46% to achieve this aim soand job security seem to be the main far?concern in these three countries, so it is not Living healthily.surprising that their enjoyment of life is Germany: 80%dependent on more tangible life aims such Germany: 72%as owning their own home or living France: 74%healthily. France: 60% Italy: 77%Although achieving “Financial security for Italy: 68%the future and old age” ranks third among Spain: 73%the life aims of people in Germany and thus Spain: 68%appears to be a greater concern there thanin the other three countries, it is actually Financial security for the future/old age.deemed to be an important life aim by the Germany: 78%same percentage of people living in Spain Germany: 34%(78 percent, fifth place) and by even more France: 73%people living in Italy (86 percent, fourth France: 32%place). In France, too, a substantial 73 per- Italy: 86% Italy: 26%cent of people believe that financial securityis important, putting it in fourth place. Spain: 78% Spain: 32%In all four countries, financial securityranks first when it comes to the differencebetween the importance of a life aim and 13
  • 14. Having my own children. Satisfaction with life. Germany: 75% Question 1: If you take a look at your life so Germany: 53% far, how satisfied are you in general with your France: 54% life? France: 35% Italy: 77% Germany: 52% Italy: 42% France: 42% Spain: 74% Spain: 50% Italy: 49% Enjoying life right now. Spain: 56% Germany: 75% Question 1a: As you see it, has your satis- Germany: 63% faction with life changed as a whole over the France: 81% France: 55% last five years? Italy: 81% Germany: 32% Italy: 59% France: 32% Spain: 78% Spain: 61% Italy: 44% All respondents (N = approx. 1,000 each country). Spain: 47% Top 2 boxes All respondents (N = approx. 1,000 each country). Top 2 boxes 2.2 Satisfaction with life: Spaniards lead the field. People in France are the least satisfied with life. Together with the Germans, they Life aims and, more specifically, their occupy last place when it comes to having achievement are closely related to satisfac- seen an improvement in their personal tion with life. The extent to which a life situation in the last five years. However, aim affects satisfaction, however, depends Germans take second place when it comes on the type of aim it is. to satisfaction with life so far, just slightly ahead of Italians. There are some life aims which are, for many people, a matter of course, for exam- In all four countries, the most important ple being in a long-term relationship or source of satisfaction with life is family and having children. Although achieving these friends, while what makes people most dis- aims increases satisfaction with life only satisfied are political and economic condi- marginally, not achieving them leads to dis- tions and financial security for the future satisfaction. and old age. The overall result concerning dissatisfaction mirrors that of satisfaction The opposite is true of the life aims “Finan- with these areas of life: the populations of cial security for the future and old age”, Spain and Germany are more satisfied with “Enjoying life right now” and “Career devel- their friends and family than those in Italy opment”. Achieving these aims has a positive and France, and they are not as dissatisfied influence on satisfaction. with their financial security. People living in Spain are more content with life than those living in the other three countries, and more of them report an improvement in their satisfaction in the past five years.14
  • 15. Life Aims II, 2005: Interview.Different countries – different recipes for success? Observations by Dr. Dennis J. Snower, President of the Kiel Institute for World EconomicsMr. Snower, the countries where Allianz con- security in planning and do not requireducted its survey have very diverse social secu- further adjustment five years later on. Therity systems. In your opinion, which country is sustainable pension reforms initiated in Italybest prepared for the demographic change? in 1992 and 1995, which will not be fully complete for another 30 years, are an exam-That is difficult to say. If you look at the ple of how such security in planning can bepension systems, then Germany and Italy are provided. Nevertheless, such long timescalescurrently in the best position to solve demo- can result in the sense of urgency beinggraphic problems. Spain has yet to introduce forgotten.sustainable reform and France is alsostruggling to do so. The demographic change How can people themselves prepare for thesewill effect healthcare systems in a similar demographic changes?way, yet here all four countries are muchless prepared, hardly any of the necessary First of all, they need to realize that in thegroundwork has been done. future they will need to take on much more responsibility for their social welfareWhat causes the greatest difficulty in than they do now, be it regarding old-ageimplementing reforms? provision, healthcare or education. They will have to pay out of their own pockets forThe social security systems are all financed many of the things which are currentlyby contributions, which worked well when financed completely or primarily by theeconomies were flourishing and populations state. This means that many of those in lowwere growing. However, things have income brackets will have to change theirchanged since then; we now have weak spending habits and the way in which theyeconomic growth and aging populations, and provide for their financial futures. Increas-the social security systems are being pushed ingly, the consumption desires of today willto their limits. State benefits which were collide with the financial provision goals ofonce simply the norm need to be reduced tomorrow.and replaced through private initiatives.Politicians, however, find it difficult to What role do financial service providers play inrenege on their election promises and to this process?reduce benefits, which is why reforms areintroduced slowly, late, or half-heartedly. The privatization of benefits once providedAnd the fact that the electorate is skeptical by the state demands more effort from peopleabout these essential reforms makes the to provide for themselves. Financial serviceprocess even harder. providers can help them to do this. While they may not be able to take over the role ofIf there is no way of avoiding reform, then how the state, they are able to provide peopleshould reforms be introduced? with the financial tools they need to adjust to the new reality. This means that productMost importantly, politicians need to be ranges must be adapted to meet these newcompletely upfront with the electorate and requirements. In addition to long-term sav-to explain the changes needed to address ings plans for old age, for example, FSPs willthe demographic problem as clearly as they have to offer products which address people’spossibly can. Chopping and changing as we financial needs during periods of educationhave with the various pension reforms intro- or training, as well as supplementary healthduced in Germany in the past ten years only insurance schemes. The insurance industryserves to destroy the confidence of the needs to offer simple, cost-effective productselectorate completely. Reforms should be for personal provision which enable all citi-designed in such a way that they provide zens to secure their own financial futures, even if they are in a low income bracket. 15
  • 16. Satisfaction with areas of life. 2.3 Long-term financial planning Your family, your friends and acquaintances. and personal provision.Question 2: Now I’m Germany: 72%going to list some aspects People in all the countries in the studyof your life. Would youplease tell me how satis- France: 68% believe that long-term financial planning isfied you are actually in important, but those in Germany accord it Italy: 67%each instance? just a little more importance. None of the Spain: 79% four countries are role models when it comes to personal provision, unlike Switzer- Your health care. land and the Netherlands which succeeded Germany: 45% in making pensions secured by capital stock a mainstay of their social security systems France: 52% early on (see Table 4). In Germany, however, Italy: 27% several years of debate in politics and the media about the Riester pension and the like Spain: 47% have not been completely without effect. Your time for leisure and hobbies. Table 4: Division of retirement income: Germany: 45% Proportion of pension income received from state pay-as-you-go systems and from France: 40% pensions secured by capital stock in Switzerland Italy: 33% and the Netherlands Spain: 41% State pay-as-you- Pensions secured go system by capital stock Your financial provision for the future/old age. Switzerland 42 % 58 % Germany: 28% Netherlands 50 % 50 % France: 27% Germany 85 % 15 % Italy: 20% Source: Brugiavini, Aging and Saving in Europe, 2002 Spain: 28% No less than a third of the German popula- Economic conditions. tion believe that however long they live they can look forward to a financially secure Germany: 15% old age. In France, only 17 percent of people France: 2% believe that. Furthermore, a significantly higher proportion of people living in Ger- Italy: 18% many, 35 percent, are satisfied with their Spain: 22% personal provision than their counterparts in Italy (16 percent), France (22 percent) and Political environment. Spain (24 percent). Germany: 3% By contrast, people in Spain are most opti- France: 2% mistic concerning their personal provision. Italy: 4% taly: 39 percent of those who have not yet achieved their aim of providing for the Spain: 13% future and old age believe that they will still All respondents (N = approx. 1,000 each country). be able to, while in Germany only 25 per- Top 2 boxes cent of people believe this (see Table 5). However, the sobering reality is that in all four countries, personal provision is in its infancy and the majority of respondents see no reason for satisfaction or optimism.16
  • 17. Life Aims II, 2005: Results – Comparison of countries. Table 5: Issues concerning longevity – Considering that demographic change is Comparison of countries. inevitable and the amount of capital cover- age in social security systems insufficient, it Long-term financial planning is is obvious that providing benefits will (very) important.1 become hugely expensive for governments Germany 62% if there is further hesitation on the subject of reform. As the first Allianz Life Aims study France 49% conducted in Germany in 2004 showed, Italy 54% people significantly underestimate the extent of personal provision necessary. Spain 54% Although people are now aware of the fact I’m (very) convinced that I will still be able that personal provision is important, they are to achieve my personal provision aim. 2 still not acting on this knowledge. One rea- Germany 25 % son is that many of them simply do not have the financial means to invest in personal France 23 % provision, and another the fact that neither Italy 24 % political reforms of the systems nor the products themselves are transparent enough. Spain 39 % In terms of where their priorities lie, how- However long I live, I have made (very) ever, people are often more concerned with good provision.3 consumption rather than personal provision. Germany 33 % 63 percent of people in Germany already forgo some current consumption to provide France 17 % for the future, and a further 27 percent Italy 20 % would be willing to do so, whereas those in France, Italy and Spain are considerably Spain 26 % more reticent. I am very satisfied with my current personal Willingness to forgo some current provision arrangements.4 consumption. Germany 35 % Question 26: Have you already given up some France 22 % things in order to make personal provision for you future/your old age? Italy 16 % Yes Spain 24 % Germany: 63% All respondents (N = approx. 1,000 per country). France: 36% Top 2 boxes Italy: 32%1 Question 6b: In your opinion, is long-term financial planning important for you to achieve your life aims? Spain: 30%2 Question 6: And if you think about the future, how con- Group: Persons not yet retired vinced are you that you will be able to achieve your life aims? Responses concerning the life aim “Financial securi- ty for the future and old age”.3 Question 29: Average life expectancy is rising continually, so you will probably live longer than the generations before you. Consequently, you will have a greater need to make personal provision for your retirement. Do you think that you have already made good provision for living longer?4 Question 10.2: How satisfied are you with your current personal provision arrangements? 17
  • 18. 2.4 Expectations of financial I know bank advisor well. service providers. Germany: 63% Germany: 60% France: 51% People need to feel that they can trust some- France: 46% one before they will talk to them about Italy: 58% their finances, and this is reflected in what Italy: 56% they want from a financial service provider. Spain: 48% Above all, customers want an advisor who Spain: 40% they know well, with whom they can form a long-term relationship, who knows their per- We have been working together for a long time. sonal situation, and above all, who is willing Germany: 68% to listen carefully to them. It is extremely Germany: 60% important that the products available are France: 51% transparent, but whether or not the advisor France: 45% also sells products from other providers or Italy: 51% has the possibility of consulting further Italy: 47% experts it is less important. In brief, the mes- Spain: 44% sage is clear: Less complexity, more trans- Spain: 42% parency and greater customer orientation! In all four countries, people still associate Bank advisor/Insurance advisor knows my financial planning with banks far more than personal situation. with insurance companies, and the expecta- Germany: 55% tions of a banking advisor are still slightly Germany: 50% higher than those of his colleagues in insur- France: 53% France: 44% ance. However, this difference can be as little as one or two percentage points. Italy: 47% Italy: 40% Spain: 42% Factors which influence satisfaction – Spain: 37% advice from a bank.Question 14: When think- Bank advisor/Insurance advisor listens carefully Bank advisor/Insurance advisor also advises oning about professional to me. products from other providers.providers such as banksor insurance companies, Germany: 76% Germany: 52%what does your satis- Germany: 75% Germany: 51%faction depend on when France: 60% France: 28%you receive advice from France: 56% France: 28%a(n) bank advisor/insur-ance advisor? Which Italy: 65% Italy: 40%aspects are most impor- Italy: 63% Italy: 39%tant to you when given Spain: 62% Spain: 39%advice? Spain: 55% Spain: 45% bank insurance Products are transparent. Bank advisor/Insurance advisor has access to further experts. Germany: 65% Germany: 64% Germany: 52% Germany: 50% France: 54% France: 53% France: 29% France: 29% Italy: 70% Italy: 67% Italy: 42% Italy: 40% Spain: 63% Spain: 57% Spain: 36% Spain: 34% All respondents (N = approx. 1,000 each country). Top 2 boxes. Results for countries as deviations from average18
  • 19. Life Aims II, 2005: Results – Comparison of countries.Summary.There are many similarities between people’slife aims in the four countries where thestudy was carried out. A good education,financial security for the future and havingtheir own children are among the top fivelife aims in all of the countries. Similarly, ofall the life aims deemed important, financialsecurity for their own futures is the aimwhich the least people have achieved. Whatis most alarming, however, is that not only isthere a discrepancy between desire and real-ity as far as financial security is concerned;but that it is by far the greatest discrepancy.People living in Spain are most satisfied withtheir lives right now and have also seenthe greatest improvement in their personalsituation in the last five years. People inGermany and Italy, by contrast, are themost critical of how much their lives haveimproved over this time period.In Germany there is a greater awarenessthan in all the other countries of how impor-tant long-term personal financial planning is.As a result, the willingness of people thereto curb consumption now to provide for thefuture is the highest, hence people in Ger-many are most satisfied with their personalprovision arrangements. 19
  • 20. 3 Results – The situation inGermany. Four years after the introduction of the Riester pension secured by capital stock on In the last two decades, a combination of several January 1, 2002, and after intensive debate factors has served to significantly change the socio- in politics and the media, the question is to economic landscape in Germany, not least German what extent the population of Germany has reunification, which positioned the country in the changed its attitudes to personal provision middle of an expanding European Union. Many people and whether or not this change has led to are also now worried about the economy and about changes in behavior. the security of their jobs, so even demographic change and its far-reaching consequences sometimes fade 3.1 Life aims: Good education into the background. Yet it is precisely Germany which most frequently cited life aim. will be particularly affected, since its state pension scheme is 85 percent funded by current contributions. The developments in the labor market are leaving their mark, as 88 percent of Germans say that “Good qualifications” are their key Burkhard Wilke, Executive and responsible for a business, a department or an Scientific Director of the German association knows the rule of thumb: a third of those involved works actively toward and consid- Central Institute for Social Issues ers the common good, a further third jogs along, and the remaining third has to be more or less When asked to rank twelve different life aims in carried by the others. This is actually confirmed by order of importance, people in Germany put civic the most recent survey of voluntary workers engagement last! How can that be reconciled with commissioned by the German Ministry for Family the belief that Germany is the birthplace of the Affairs: in 2004, 36 percent of the population had concept that it’s “good to belong” to a club or been working in some kind of voluntary capacity association and that the Germans donate more to for over 14 years, 34 percent were working in a charity than any other nationality? Well, the second voluntary capacity at that moment and 30 percent of these beliefs is most definitely a myth: although were not interested in voluntary work. However, in absolute terms the Germans do give a lot to the survey did provide a glimmer of hope, since charity, in terms of pro-capita giving they are at the hidden amongst the 34 percent of people who are mid to low end of the scale when compared with “co-joggers” are 12 percent who are willing to other industrialized countries. Moreover, according remain involved in a voluntary capacity in the long to a recent GfK survey, the entirety of all charitable term. donations can be attributed to just 28 percent of the German population. And although it is true Our society needs to work hard to mobilize these that there is a wealth of clubs and associations in silent reserves. The voluntary sector needs to pro- Germany, some 600,000 officially registered and mote itself as being transparent and willing to several hundred thousand more not registered, develop, policymakers should remove the red tape many of these principally exist to serve the leisure which hinders the voluntary sector, and companies interests of their members. Thus people who should not only encourage people to do their bit belong to them would hardly see their member- for society, but also act as role models. After all, is ship as civil engagement. it really necessary for every single corporate social responsibility (CSR) measure to come with a tag Yet perhaps we should look at this response in a attached detailing how it benefits the company? To different light: 30 percent of people living in Ger- paraphrase John F. Kennedy: Ask not what society many say that civil engagement ranks among their can do for you – ask what you can do for your most important life aims, and 28 percent donate20 society. money to charity. That is a start, at least. Anyone
  • 21. Life Aims II, 2005: Results – The situation in Germany.life aim. They rank them well above “Being Importance and achievementin a long-term relationship” (80 percent) and of life aims.“Financial security for the future and old 88% Having a good education/age” (78 percent). However, their main con- 28% 72% trainingcern seems to be securing a job rather than 80% Being in a long-term relationshiphaving a good career, as only 65 percent 16% 84%believe that “Career development” is an 78% Financial security for the future/important life aim. 60% 40% old age 75% Individuality and the ability toThere was also an increased awareness of 35% 65% make my own decisionsthe necessity for personal provision, with 75% Having my own children94 percent of Germans assuming that they 20% 80%themselves will have to take on responsibil- 73% Enjoying life right now 44% 56%ity for providing for their futures. Only10 percent consider themselves to be well- 70% Living healthily 50% 50%informed about political reforms, and only 65% Career development6 percent believe that the reforms of the 49% 51%state social-security system will leave them 62% Having enough opportunity for leisureadequately provided for in the future. 45% 55% activity and personal hobbies 60% Owning my own homeThus the aim of “Financial security for the 27% 73%future and old age” advanced to third place 38% Discovering the world – travel abroadin the list of Germany’s most important life 54% 46%aims with a score of 78 percent. What is 30% Civic engagementmore, since only 34 percent of respondents 28% 72%have achieved this goal, it is here that there Poorly achieved Well achievedis by far the greatest discrepancy between All respondents (N = approx. 1,000 each country).the importance of a life aim and its achieve- Top 2 boxesment. Only 28 percent of Germans are satis- Question 3: Now l’d like to mention several possiblefied with their financial security, which they personal life aims. Please tell me how important theseconsider to be a major prerequisite for the are to you.achievement of many other life aims such as Question 3a: And to what extent would you say youowning their own homes (79 percent), a have been able to achieve this aim so far?secure future and old age (71 percent),discovering the world (71 percent), havinga good education (52 percent) and havingchildren (50 percent).Dr. Michael Eilfort, do and what that actually do. In reality, extremelyManaging Director of “Stiftung few people are making enough personal provision.Marktwirtschaft”, a market-oriented The reason for this is that in this country of wealtheconomic-policy think tank redistribution, the state is far too involved in welfare. If we want people to take on more“Our pensions are secure” – anyone who still responsibility for their own welfare, we must givebelieves this today probably still believes in Santa them the chance to do this and also allow them toClaus. Faced with massive demographic change, retain more of their income so that they are in aour social security systems are in no way future- position to do it. Since the social security purse isproof. Not only are the experts aware of this, but empty, the only way to do this is for the state toincreasingly also the general public. become less involved in welfare and focus on its real tasks. That will lead not to a loss in terms ofAnyone who wants to maintain an adequate stan- welfare, but rather to an opportunity to make thedard of living in their old age simply must take out system more dynamic, as well as vastly increasinga personal pension. Yet in Germany there is still a freedom.huge gap between what people know they need to 21
  • 22. Extent to which achieving the aims The majority of the German population depends on financial conditions. (80 percent) believe that they are personally responsible for achieving these aims. How-Owning my own house 79% ever, more people there than in France, ItalyFinancial security for the 71% and Spain also believe that the economyfuture and old age (39 percent) and policymakers and the stateDiscovering the world – 69%traveling abroad (28 percent) have a certain influence on theHaving a good education 52% achievement of these aims.Having my own children 50% People in Germany are more critical whenEnjoying life right now 49% it comes to the development of socio-eco- nomic conditions which make it possibleCareer development 45% to achieve important life aims. 27 percentLiving healthily 44% of people there believe that these condi-Having enough opportunity tions have improved, but just as many sayfor leisure activity and personal 42%hobbies that they have deteriorated, which is theIndividuality and the ability to 41% second most negative figure of all fourmake my own decisions countries. Only in Italy was it slightly higher,Being in long-term relationship 36% at 28 percent.Civic engagement 27% The Germans are also less optimistic. Only All respondents (N = approx. 1,000 each country). 25 percent of those who have not yet Top 2 boxes achieved their aim of financial security Question 5: You just listed several important aims in your believe that they will still be able to do so. life. To what degree would you say is the achievement of these aims also dependent on financial conditions? Dr. Eugen Buß, reality finally becomes clear. We can no longer University of Stuttgart-Hohenheim depend on the same level of state provision that people enjoyed in the past, indeed there is an Germany is in a state of flux: their has been so ever-widening chasm between demands on the much change in societal values in so many areas welfare state and the probability of those demands that this has led to the formation of completely being met. As a result, people are becoming less new social benchmarks. Trust in state institutions satisfied with life. They value financial security, but continues to dwindle and the disparity between because in the past there was never any need to people’s perfectly rational arguments concerning make personal provision for one’s own future, provision and the opinions of experts is growing. they are unfamiliar with the idea. Here too, there Health and financial security have become the pri- is an odd ambivalence, on the one hand people mary concerns of people in Germany. They want want financial security at all stages of their lives, to keep what they already have, but expand it just but on the other they feel no obligation to take on a little and make it just a little more comfortable, any responsibility for achieving this. just a little more select. They value continuity, clar- ity and security, the more the better. Thus there Conclusion: The current value profile for people is no question of people here suddenly having living in Germany means that financial service lowered their expectations. At the same time, experts must completely redefine their roles. They however, we are seeing a fundamental transition must be able to manage a barrage of new value from a society which prioritized long-term goals to coordinates such as a) a general loss of trust, b) one which favors short-term ones; people in this prejudices against expert opinion, c) the new country are now much more concerned with living importance accorded to networks based on mutual in the moment. benefit, d) the new German “coffee house” mentality, and e) people’s increasingly emotional As we pass through this period of changing societal approach to financial services. values unique to Germany, however, another new22
  • 23. Life Aims II, 2005: Results – The situation in Germany.3.2 Satisfaction with life: Satis- with their financial security for the future and old age. It is in this category that wefaction depends on achieving life see the biggest discrepancy in the surveyaims. between the three factors: 78 percent of people say that the life aim is important, butA higher percentage of people living in only 34 percent have achieved the aim andGermany are satisfied with life (52 percent) only 28 percent are satisfied with this areathan are very dissatisfied (only 8 percent); of their lives.32 percent are more satisfied than they werefive years ago, while 21 percent are less sat- Table 6: Correlation in Germany between actualisfied. However, satisfaction with life is to a financial planning and satisfaction with currentgreat extent contingent on the achievement long-term financial plans.of personal life aims. ... with my current long-term financial plans. Question 10.1: “How satisfied are you withAnalysis of the replies revealed that there (Very) satisfied (Very) dissatisfied your current long-termare some life aims whose achievement is, if financial plans?” I invest at least 10 % of my net income inanything, regarded as a matter of course. Question 7: “I would like personal provision. to read you a few state-Although achieving these aims increases ments about long-termpeople’s satisfaction with life only marginally, 57 % 14 % financial planning. Cannot achieving them leads to dissatisfaction. you tell me which of I save money through a supplementary health these are true for you?”Aims of this type are having a good educa- insurance/supplementary nursing insurancetion, being in a long-term relationship and scheme in case of unexpected illness.having children. The opposite is true of thefollowing life aims: financial security for the 51 % 20 %future and old age, the ability to make one’s I have arranged for long-term personalown decisions, enjoying life right now and provision with a financial expert (fromcareer development. Achieving these aims banking, insurance).has a positive influence on satisfaction. 55 % 15 %The majority of people in Germany are only I know exactly how much money I will havevery content with their family and friends available when I reach retirement age.(72 percent). In joint second place, with 45percent each, come health provision and 43 % 23 %having enough opportunity for leisure activ- Correlation.ity and personal hobbies. By contrast, only All respondents (N = 1,003). Top 2 box and Bottom 3 box28 percent of the population are satisfiedDr. Markus Rieß, relatively small. Personal provision plans must takeSpokesman for the Management Board various factors into account, which is why compre- hensive, product-independent advice is essential.of Deutscher Investment Trust (dit) A balanced securities portfolio is one that spreads its assets widely, which means investing in pensionPersonal provision is more important today than products as well as shares. The latter offer theever. Everyone has different objectives and differ- potential to develop value significantly, particularlyent expectations of the risk and return of their in the longer term.investment, and as the socio-economic climate inwhich people plan their lives and financeschanges, they demand more and more flexibilityfrom their investment. Although investmentfunds offer this flexibility and offer broadly-basedportfolios which allow investors to share in thedevelopment of different investment categoriesand regions, the proportion of people in Germanywho use them as tools for financial planning is 23
  • 24. This impression is confirmed by correlating income of 2,500 EUR would have to save the replies given by individual respondents. 165 EUR a month over a period of 25 years Those who said they invest at least 10% of at an average interest rate of 4 percent to their net income in personal provision or maintain an average standard of living in old who have drawn up a personal provision age. The calculation assumes that this plan with a financial expert are significantly income from personal will be in addition to more often more satisfied (see Table 6). the state pension, but does not take into account the potential cost of long-term Worries about old age. nursing. However, low incomes restrict the financial latitude which people need toGeneral economic development 49%in Germany make personal provision, especially if theyHealth 48% are young, starting a family or over 50. Only around 30 percent of respondents pay moreEnvironment pollution/ 44%climate change than 250 EUR into a personal provisionChange in societal values, 42% plan, while just under 20 percent set asidesocial coldness nothing at all. Particularly alarming is theFinancial provision for family 39%members and children fact that only 25 percent of those who haveLimited mobility 34% not yet achieved their personal-provision goals believe they will still be able toLoneliness 32% achieve them. This is despite the fact that aOwn financial security 32% significant majority (over 80 percent) of the German population is prepared to hold backWar/terrorist attacks 28% on consumer spending in favor of personalAccommodation/level of rents 22% provision. Indeed people in Germany are far more willing to do this than people in any All respondents (N = approx. 1,000 each country). Top 2 boxes of the other three countries. Question 28: When you think about your future, what “It’s normal to feel worried about your causes you to be most concerned with respect to old age? financial security until you actually get older, and then you either stop worrying, or In the search for reasons why there is such a you’re so worried about other things that great discrepancy between how important it doesn’t seem so bad” is a statement often people believe the aim of financial security is heard from today’s under-40s. Yet given the and the extent to which this aim has actually demographic time bomb, this is an attitude been achieved, the survey provides Allianz that people cannot afford to have. with a few answers. A person living in Germany who had an average gross monthly Dr. Maximilian Zimmerer, however, anyone in gainful employment should CFO of Allianz Lebensversicherungs-AG think about insuring themselves against occupa- tional disability. This is not only an issue for those Life expectancy is continually increasing. Com- working in dangerous occupations, since every bined with other factors, this is pushing our social second locksmith or painter, every third IT special- security systems to their limits. Many people in ist and every sixth tax consultant becomes unable Europe have thus already realized that their state to work in their chosen profession. If this happens, pension will not be sufficient and that they must the state then pays them what is known as general all find a second source of income to ensure an disability benefit, but only in the worst case, that adequate standard of living in old age. This is the is if the person concerned can work less than three core competence of life insurance companies, the hours a day, and the benefit is only around 31 only companies that guarantee their customers percent of their gross final salary. Consequently, lifelong income through a pension scheme. That is private insurance is crucial. exactly the kind of security people need in their old age. In addition to providing for their old age,24
  • 25. Life Aims II, 2005: Results – The situation in Germany.3.3 Long-term financial planning By contrast, 27 percent of people say that they have not yet made sufficient provisionand personal provision: In their for their future, but are at least aware thatinfancy. they have to do something. 25 percent have no extra income to invest in personal provi-62 percent of the German population now sion, while only a fortunate 20 percent needbelieve that long-term financial planning is give the subject no thought because theyextremely important, yet only 28 percent have already made good provision for theare satisfied with this area of their lives. future.Although 50 percent of people living in If they were asked today to pick a product toGermany have at least had the amount of address their personal provision needs,pension they can expect to receive in retire- although 66 percent of people living in Ger-ment worked out, according to the Allianz many would choose savings accounts andsurvey only 31 percent know exactly how savings plans, 62 percent would also choosemuch money they will have at their disposal. life insurance and 59 percent a personal pen-The reason why people are relatively well sion plan. Joining these as favorites are pro-informed is because one year ago the Ger- fessional disability insurance (61 percent),man pensions authority began to send every company pension plans (57 percent), supple-person a letter which tells them the amount mentary nursing care insurance (55 percent)of state pension they can expect to receive and private health insurance (47 percent).according to current calculations. However, 54 percent would select a building loanthese figures should be treated with care, as agreement, 43 percent would choose anthey are based on the assumption that the investment fund, while 28 percent wouldperson will be in continuous employment invest in the stock market themselves. Asuntil they are 65. Moreover, the planned regards the Riester pension, which brings uppension adjustments of 1.5 and 2.5 percent the rear with a score of only 24 percent, itare too optimistic given the forecast develop- is quite clear that more work has to be donements in wages and purchasing power. to build up confidence and explain how the product works.Only 39 percent of people living in Germanyhave so far drawn up a long-term personal In terms of their knowledge of and willing-provision plan with the help of a financial ness to invest in personal provision products,services specialist, and only 37 percent of people in Germany are once again ahead ofthem invest at least 10 percent of their net those in France, Italy and Spain, since theirincome in personal provision. “Yes” scores are above average for all the products mentioned in the survey.Dr. Ursula Engelen-Kefer, For this reason it is necessary to expand the stateDeputy Chairperson of the Federation social security systems according to the principle of citizens insurance (Bürgerversicherung). Theof German Trade Unions prerequisite for this is a socially fair reform of taxes and contributions which would reduce the burdenThe main problems dogging social security systems on social security systems. Introducing a tax-are the ongoing erosion of the number of em- financed allowance for social security contributionsployed persons obligated to pay social insurance, would promote socially-secure employment. Therethe fact that it is now normal for people to go is also no doubt that a greater degree of personalthrough periods of where they do not work, and provision is needed; we believe that the best waythe rising numbers of long-term unemployed. The of facilitating this is by expanding company pen-very foundation of the social security system has sion schemes. However, one thing is clear: we willdeveloped cracks, not because of demographic only be able to rise to the challenges of the futuredevelopment, but because the advent of a more if our economy adjusts to demographic develop-flexible labor market has changed the employment ments through a long-term policy of ensuringstructure. sufficient professional training and organizing work so that it is open to people of all ages. 25
  • 26. 3.4 Expectations of financial transparent (65 and 64 percent respectively), the person knows the advisor well (63 and service providers: 60 percent) and whether the advisor is famil- Trust rather than competence? iar with the customer’s personal situation (55 and 50 percent). Only then does it mat- Trust and competence! ter if the advisor can provide access to other experts (52 and 50 percent) or sells products When asked who they trust to advise them from other providers (52 and 51 percent). on long-term financial planning, people liv- ing in Germany said that they seek the advice of their long-term partners (51 percent) Summary. and families (47 percent) before consulting a personal banking or insurance specialist Over the past five years, there has been little (37 percent). However, when these replies improvement in how satisfied people living are compared with the data on how satisfied in Germany are with their lives. Yet a good people actually are with their financial plan- 50 percent of them are satisfied. Having a ning, the professional advisers are ahead of good education was the life aim mentioned the field. most often. Although financial security for the future and old age was also seen as being It seems to be no coincidence that people an important life aim, only a few people rate the competence of their long-term have managed to achieve this aim so far. Yet partners and families higher than that of the precisely this life aim has a high influence professionals, as their expectations concern- on satisfaction. ing this competence are based on factors which professional advisors have evidently Most people living in Germany believe that neglected until now. long-term financial planning is important, but most of them do not plan or make Satisfaction with advice from a banking or provision for the future: one third of the insurance advisor is dependent on whether population thus is or will be totally depen- the advisor listens attentively (banking: dent on the state pension. Another thing 76 percent, insurance: 75 percent), the rela- which people worry about is the political tionship is long-term (68 and 60 percent and economic climate. respectively), the product being offered is Satisfaction with professional competence on financial matters. Rating of professional competence Influence on satisfaction with financial planningPersonal environmentPartner/spouse 51% long-term financial planningFamily 47% Satisfaction with currentFriends/colleagues 22%BankMy personal bank advisor 36%My bank 35%InsuranceMy personal insurance 37%advisorMy insurance company 34%MiscellaneousMy own research 35%(e.g. media reports)Consumer bureaus 25%Independent financial advisors/ 15%brokers All respondents (N = approx. 1,000 each country). All interviewees (N = approx. 1,000 each country). Top 2 boxes Correlation with Question 13 Question 13: And from your point of view how would Question 10.1: How satisfied are you with your current you rate the professional competence in each instance? long-term financial planning?26
  • 27. Life Aims II, 2005: Results – Specific target groups in Germany.4 Results – Specific targetgroups in Germany.Interestingly, however, the different demo-graphic groups sometimes deviate from If the results of the study as a whole are summarized,this rule. For example, young adults are thesecond most satisfied group, although they then Allianz’s second Life Aims study, like the first,have the lowest income and the lowest level shows that a high level of income often goes hand inof personal provision. Young families, too, hand with a high level of satisfaction with life, a gooddespite having a high level of financial level of personal provision and thus satisfaction atcommitment and little disposable income, having achieved the aim of financial security for theand even single parents, are significantly future and old age.more satisfied with their lives than singlepeople of any age. shown clearly when it comes to how confi-4.1 Young adults (18–25 years). dent they are that they will still be able to achieve their aim of financial security:Young adults aged 18 to 25 rank second 53 percent of young adults believe that theywhen it comes to how satisfied they are with will be able to achieve financial security,life (57 percent), yet they are least satisfied while only 6 percent of over-50s believe this.with their financial security for the futureand old age (16 percent). The majority of Retirement income – from a statethis group have not yet made any personal pension or from personal provision?provision (58 percent), and only 12 percent 80% Question 7.1: What dosay that they have made “good provision”. you think: What percent-As would be expected, people in this age age of your salary willgroup are more likely to have low incomes, 60% you receive as a state pension?that is less than 1,500 EUR (38 percent), Question 7.2: Besidesand only 43 percent are working. 40% your state pension, will you have any addi-However, this low level of satisfaction with tional income during 20% retirement?financial security for the future and oldage shows clearly that even for the younger Expected percentage of 0%generation a low level of provision is not final salary to be received Up to 29 years 30 to 49 years 50 years and older as a state pension.consistent with a high level of satisfaction.The younger the respondent, the less they Percentage of people Group: Employed people who will have an addi-expect of the state pension system and the tional income duringmore aware they are of how necessary it is Retirement is a long way off, so what should retirement.to ensure additional retirement income: young people be doing?whilst over-50s still expect to receive 55 They should be making the most of thepercent of their final salary in the form of a considerable length of time which they stillstate pension, under-30s expect to receive have left, since although they have relativelyonly 35 percent. little money available, they are not usually supporting a family at this point in their lives.The reason for this generation being so satis- This considerable time period is not onlyfied can be put down to the fact that they beneficial because it means young peopleare optimistic and they still have plenty of have more time to save, but also because ittime to make personal provision. This is 27
  • 28. Tobias Kemnitzer, Not without reason is the demand for personal Director of the German Foundation for provision products relatively low despite the high awareness of how important they are. The huge the Rights of Future Generations range of products, from investment funds to the Riester pension, is more confusing and less trans- To put it briefly but not too briefly, justice for all parent than if we were trying to work out what was generations means that young people today as the best cell-phone contract to choose. And unlike well as future generations should have the same a cell-phone contract, this decision is binding opportunity to satisfy their needs as the genera- for the rest of our lives. What has happened to tions which came before them. However, the likeli- transparency and reliability? hood of the current generation of “thirty-some- things” receiving what they need from the state With its Riester pension, the government is show- pension system is small. Confronted with demands ing us exactly how not to go about solving the from all directions, we currently feel a little as problem. Instead of setting standards which poten- though we are in the “rush hour” of life with no tial investors can easily understand and compare, idea if and when this will end: we are expected to for example by introducing a certification system, start a family, need to get a foothold on the career the introduction of this supplementary pension ladder in order to be able to save any money at all, secured by capital stock has caused great confu- and at the same time, as the role models of the sion. This has ultimately led to people being less new society where people take over responsibility dependent on the competence of pension policy- for their own welfare, should plan at last 30 years makers, but even more dependent on the compe- into the future. For many of us, that is simply too tence and goodwill of their advisors. And of course much to expect. these advisors are often primarily interested in swiftly concluding a contract. allows them to invest in higher risk and thus career, starting work or buying their first higher return investments such as stocks and property. Quite apart from that, retirement is investment funds. Relevant information and a long way off. All true, yet it is exactly this explanations should be provided at schools long period of time which is of such benefit and further education establishments, and when it comes to investing in personal the government should provide pension sub- provision. This is because over 45 years, it sidies as an incentive as early on as possible. is not only possible to earn a great deal of interest, but also to invest in higher risk People in their early twenties have probably investments which offer even higher rates of given hardly a thought to their pension return. For example, if someone invests just arrangements. That is understandable, as 25 EUR a month in a share-based invest- they are concentrating on completely differ- ment fund with an annual rate of return of ent issues such as planning their studies and 6 percent, then after 45 years they will Manfred Weber, MEP Policymakers and the state must come to the State Chairperson of the Young Union sobering conclusion that as social security systems become increasingly ineffective, they need to be of Bavaria less involved in them. Their emphatic message should be less state involvement and more indi- Our social security systems are urgently in need of vidual responsibility. reform. The Young Union of Bavaria thus supports broadly-based reform rather than short-term cor- Yet the young generation will only become com- rective measures. The young people of today are pletely aware of the precarious situation they are caught in a cleft stick, paying a high level of contri- in if policymakers are brave enough to be more butions into the social security system although honest with them. Today’s government must be they can only expect an inadequate level of cover brutally honest about the fact that the social secu- in times of need or in old age. This is unfair and rity system is in dire financial straits. Only when is a subject of concern for young people. For we have achieved a greater degree of credibility example, it is evident that today’s 30-year-olds will will young people summon up the courage to receive nothing from the nursing care insurance stand on their own two feet and provide for their schemes that they are currently paying into. own futures.28
  • 29. Malte Spitz Erecting financial access barriers such as study orExecutive Committee of Green Youth childcare levies is not the right way to get more money into the education system, since these areThe Life Aims II study shows that people in Ger- simply a further hindrance to precisely those socialmany now also believe that a good education classes which already have problems accessingis paramount and should be available to all. The these institutions.fact that the German education system is not ina position to deliver equal opportunity of access to It is already evident from the trends in the federaleducation is thus all the more alarming. states that this accessibility gap will continue to influence young people’s decisions for or againstThis should be the main task of any parliament studying. And the experience of other countrieswhich believes in justice, allowing individual worldwide shows us that private sector studentfreedom and allowing individuals to achieve their loans and grant systems will change little. Instead,goals. it is a central task of the state, and thus also of society, to finance an education system which isIt is scandalous that there is such a chasm between accessible to everyone, from their early childhoodthe desires of the population and the very real to when they go to university or begin work.deficit on the one hand and the inactivity of politi-cians, particularly at federal state level, on theother.have amassed almost 70,000 EUR, only they usually only have an average income13,500 EUR of which they have actually (71 percent earn between 1,501 andcontributed out of their own income: 4,000 EUR) and rarely a high incomethe rest comes from reinvesting the share (10 percent earn over 4,001 EUR), or fixedincome. assets of over 10,000 EUR (56 percent do not), they are more likely than others to make personal provision (63 percent), and4.2 From people starting a family 28 percent even say they are making goodto the “sandwich generation”. provision for the future. Correspondingly, when it comes to satisfaction with financialAccording to Allianz’s Life Aims II study, security, they are in second place, justpeople starting a family are by far the most behind early retirees. By contrast, theysatisfied people in Germany. Although occupy first place when it comes to dissatis-Johannes Vogel This would indeed be a double burden for youngNational Chairperson of the people, who would need to meet the existing pension claims of those in the generations aboveYoung Liberals them as well as to invest in their own personal provision. A convincing argument for it, however,The realization that despite all the reforms dis- is the fact that as each day without reform passescussed and implemented so far, the state pension and the demographic imbalance increases, sowill not be sufficient to support people in their old does the unavoidable burden of transition to suchage seems to have finally dawned on the popula- a system. Also, an 80 percent majority of peopletion. For 94 percent of them the solution is clear: living in Germany is prepared to curb consumermore personal provision is needed. For that rea- spending a little in order to invest in personalson, policymakers should finally dare to take the provision. So policymakers just need to be braveradical step of beginning the gradual transition to enough to explain that far-reaching reform isa pension system fully secured by capital stock, necessary!whilst making personal provision compulsory. 29
  • 30. Philipp Mißfelder, National Chairperson Reforms of the pension system must therefore of the Young Union recreate confidence by setting a clear course on the one hand, and increase people’s financial The Allianz Life Aims II study shows that people latitude by reducing state demands on their in Germany realize that it is necessary to make income on the other. Both these things can only personal provision for old age, but are currently be achieved and the demographic time bomb not in a position to be confident in their own defused if the current pay-as-you-go scheme is ability to make this provision. Consequently, they supplemented with capital-secured products. do not believe they will be able to achieve their Nursing care insurance must be moved into the life aim of providing for old age, something which private sector, some aspects of health insurance is made even harder by the fact that the financial secured by capital stock and greater emphasis latitude for this is decreasing. placed on personal provision for old age. In addi- tion, there must be a comprehensive tax reform which simplifies tax law and leaves people more of their income, thus reducing the burden on them so that they can achieve their goal of old-age provision. faction with economic conditions (all the People starting a family often find them- demographic groups are similarly dissatisfied selves in a difficult situation (see box on with the political climate). the “rush hour of life”). After the birth of their first child, they usually only have one Satisfaction at different stages of life. income, but at the same time living costs Overall satisfaction 80% and the extent of necessary personal provi-with life sion rise. This is the start of a stage in their Satisfaction with long- lives which usually lasts for two decades or 60%term financial security more, incorporates them buying their first Satisfaction with home and ends with financing the children’spolitical environment 40% studies. Moreover, as the average age of Satisfaction with first-time parents rises and their own parentseconomic conditions live longer, more and more families are con- 20% fronted with the challenge of financing not 0% only their own lives and personal provision, Young Singles / People Families Early but also their children’s studies and the care adults DINKs starting a retirees of their parents. Often only a few years from family Björn Böhning, National Chairperson of Under these conditions, however, a system based the SPD Young Socialists purely on personal provision for the risks of old age is almost impossible, especially when we con- The typical employment history of a young person sider that young people potentially also face the has changed radically in the last few years. financial burden of starting a family. Only a small Although youth unemployment in Germany is number of our generation will manage to make relatively low, the traditional progression through up the deficit in provision at a later stage of their working life is now further and further from reality. life and only then is that possible of they curb Unpaid internships and further training, part-time consumption considerably, which has an obvious jobs and periods of unemployment are now knock-on effect on domestic demand. common features on people’s resumes, regardless of what qualifications they have. Young people Consequently, the collective security provided by are accepting the demands of flexibility, partly the social security systems will remain crucial, because they have to and partly because they even in the future. The Scandinavian states prove reflect their own expectations of working in the that a high level of security provided by the state modern world. encourages innovation, flexibility and economic prosperity, and is thus truly fair to all generations.30
  • 31. Dr. Matthias Meyer, The result is that our country has fewer and fewerHead of the Church and Social Policy children. This cannot be allowed to happen, because a society without children is a societyDepartment at the Secretariat of the without a future. Old-age provision without follow-German Bishops’ Conference, Bonn ing generations is not possible, even if it is secured by capital stock. Moreover, in a knowledge-basedFor several years now, policymakers have been economy like ours, children must receive the bestfollowing the same pattern, according priority to possible education and qualifications, yet our edu-the here and now rather than to the future, to cation system is not achieving this, especially aswhat we have rather than to what is necessary, to regards those children who have already had anthe interests of today rather than the interests of unfavorable start in life. Significantly more efforttomorrow. Issues which are influential and can be must be made in this area in order to improve allwell organized always win through against those children’s chances of a good education.which are difficult to organize but are particularlyin need of support. This is illustrated particularly We need a society which has the courage to havewell by the way that public debt is being allowed children. One of the central tasks of policymakersto accrue unchecked at the cost of future genera- and all community groups is thus to support andtions, as well as the systematic way in which strengthen families, because our futures start withfamilies with children are being put at a disadvan- our children.tage, for example in the world of work or termsof pension arrangements. Having children is beingmade economically unattractive.pension age themselves, they have become 4.3 50-plus generation.the “sandwich generation”. Over half the 50-plus generation is satisfiedSingle parents are in an even more difficult with life, and a surprising 33 percent are sat-situation. In contrast to those starting a isfied with their financial security, which isfamily (19 percent) and young families significantly more than the figure for 30 to(9 percent), significantly more single parents 49 year-olds (28 percent) and 18 to 29 year-(48 percent) have to survive on a low olds (16 percent). 23 percent of over-50smonthly income (less than 1,500 EUR). have only made a little personal provisionDue to these adverse conditions, more than and 48 percent absolutely no provision, buthalf of them (53 percent) do not make any at least this generation expects to receive apersonal provision. state pension of 55 percent of their final salary.Brunhilde Raiser of a high level must provided for all, so that chil-President of the National Council of dren can grow up with children and parents have time to work. Women must also be given the sameGerman Women’s Organizations salary and promotion opportunities as men – currently women in Germany earn approximatelyFor decades, the National Council of German 30 percent less than men for doing the same workWomen’s Organizations has been demanding an and rarely reach management positions.independent and secure existence for women,both during their working lives and thereafter. The As private insurance becomes more and moretwo are interconnected, as old-age provision must important, it is urgent that women are offeredbe funded from working income. policies which do not have premiums 15 percent above those paid by men simply because womenReforms of the social security systems which are expected to live longer.guarantee that women will be provided for equallyas well as men affect all areas of society. The labormarket must give women the same opportunitiesas men to take on gainful employment. Child care 31
  • 32. However, at this age, those who have not The rush hour of life.achieved their aims of financial security People starting a family are right in the middleare less likely to believe that they will do of the rush hour of life. In their professionalso (6 percent compared to 53 percent of lives they are laying the foundations of their18 –29 year-olds). future careers, while in their private lives having children may be accompanied by theWhat is very difficult at this age is the situa- purchase of their first home, which demandstion for single parents. Of all respondents, long-term financial obligations. Yet at thisthey receive the lowest income (62 percent point in their lives at the latest, they needof them receive less than 1,500 EUR a to begin making personal provision for oldmonth) and thus have almost no possibility age. When doing so they should make fullof doing anything more towards their use of the state support available, just aspersonal provision. they do when buying a home, and they should also make a long-term savings plan.Level of provision achieved at different Property is an important component of old-stages of life. age provision. The Riester pension is a fur-100% ther basic element. By making full use of basic and child subsidies, it is possible to80% achieve a subsidy level of roughly 30 per- cent. Investing just 100 EUR per month in60% the Riester pension would result in a monthly income of just under 400 EUR40% each for both father and mother from the20% age of 65.0% Young Singles / People Families Early adults DINKs starting a retirees family Good level of provision Some provision No private financial provisionThose who are already retired have littlefinancial latitude and are heavily dependenton the state pension, as 90 percent of themhave made absolutely no personal provisionfor old age.32
  • 33. Life Aims II, 2005: Appendix.I Study objectivesand methodology. This Allianz “Life Aims” study focused on This provides a basis of telephone numbers the issues surrounding people’s personal which in principle allows every landline in objectives in life, their satisfaction with life Germany to be accessed. Non-existent and their financial security at different numbers are included as neutral results and stages of their lives. The objective of the as such do not create a problem. study was to investigate the similarities and differences in these areas between people Ideally, representative surveys are carried living in the four countries Germany, out using stratified random sampling, where France, Italy and Spain. a sampling allocation plan stipulates how many interviews should be carried out with people representative of different strata I.1 Methodological approach. (e.g. federal state, size of municipality, age, gender, household income), so as to avoid as In order to collect the life aims data, a stan- far as possible systematic biases within the dardized questionnaire was used to carry sample. This method was used in the Life out computer-assisted telephone interviews Aims II study to ensure a representative dis- (CATI) in the four countries Germany, tribution of the interviews over the different France, Italy and Spain. The universe chosen strata. for the study was people aged 18 to 75 living in private households who spoke the native language of the country concerned. To Project design and implementation. ensure statistically-accurate statements, in each country a representative sample of The Nuremberg-based market research insti- at least 1,000 people was chosen. The tute GfK was commissioned with the design sampling method used was comparable in and implementation of the survey and the each country, and is described here using subsequent data analysis. As the largest mar- Germany as an example. ket research institute in Germany and the fourth largest in Europe, GfK has a network The basis for the survey in Germany was the of national institutes and can thus guarantee ADM telephone sampling method developed high-quality data collection of comparable by the Working Group of the Federation quality in all countries. GfK assisted Allianz of German Market and Social Research in creating the questionnaire, which was Institutes (ADM). In Germany, the ADM then subjected to a pre-test in all four coun- telephone sampling method is the best way tries to determine its suitability in the field. of using random digital dialing (RDD), The survey itself was carried out between which itself ensures the necessary random- June 15 and August 5, 2005, with each ness of samples. ADM-RDD numbers are interview lasting an average of 30 minutes. generated by removing the last two digits of listed telephone numbers and replacing these with all 100 possible pairs of digits. The digits in the newly generated numbers are then put into a random order. A so- called 100 block will thus contain unlisted numbers and numbers which do not exist. 33
  • 34. Table 7: Data collection. Number of interviews In the “Life Aims” project, the variable per country and period. “Satisfaction with life” can be regarded as a dependent variable. Satisfaction with life Number of Period interviews can be dependent on various factors, for example satisfaction with Germany n = 1,003 15 June –19 July 2005 • family, friends and acquaintances, France n = 1,000 27 June –11 July 2005 • financial security in the future and old age, • health care, Italy n = 1,001 04 June –19 July 2005 • the political climate, Spain n = 1,000 04 June –05 Aug 2005 • the economic climate, • opportunity for leisure activity and hobbies, • or the net household income. I.2 Rating scale used. Regression analysis examines whether these The respondents were asked to rank their independent variables influence the depen- answers on a scale from 1 to 7, where 1 cor- dent variable “Satisfaction with life”. responded to “Does not apply at all” and 7 to “Applies 100 %”. For the purposes of data Procedure. analysis, the scale values were combined into three boxes. The top box, “Applies”, The data from two variables, e.g. “Satisfac- contains values 6 and 7, the middle box, tion with life” and “Satisfaction with finan- “Indifferent”, the values 4 and 5, and the cial security for the future and old age”, low box, “Does not apply”, the values 1, 2 are measured for each person. Regression and 3 (see Illustration 1: Data collection. analysis then serves as a tool to investigate Scale used). the correlation between these two charac- teristics. Illustration 1: Data collection. Scale used. Once information on the two characteristics “Satisfaction with life” and “Satisfaction Please rank your answer on a scale of 1 to 7, with financial security for the future and old where 1 means “Does not apply at all” and 7 age” has been collected, this is plotted for means “Applies 100 %” all of the individuals in the sample using a scatter diagram. Each point on the diagramDoes not apply at all Applies 100% represents an individual in the sample. The 1 2 3 4 5 6 7 scatter diagram can have various different forms and gives the first indication of the type of relationship (see Illustration 2: Different scatter diagrams). Low Box (1–3) Middle Box (4–5) Top Box (6–7) “Does not apply“ “Indifferent“ “Applies“ In the next step, the clusters are described using the most relevant mathematical func- tion. If the cluster indicates a relationship, I.3 Type of analysis used. then the strength and type of this relation- ship is of interest. Diagram A suggests a In addition to purely descriptive analysis, linear relationship, as the cluster can be regression analysis was used. Regression described well by a line. Diagram C indi- analysis examines the type of relationship cates a quadratic relationship, while diagram between two variables, the objective being B indicates no relationship between the two to predict the value of one dependent characteristics shown. variable as a function of one or more inde- pendent variables.34
  • 35. Life Aims II, 2005: Appendix.Illustration 2: Different scatter diagrams.Satisfaction with life Satisfaction with life Satisfaction with life a Satisfaction with financial security b Satisfaction with financial security c Satisfaction with financial security A mathematical formula is then used to Summary. calculate the regression line which best fits the cluster, determine its slope and at what With the help of regression analysis, it is point it intercepts the y axis. The aim here possible to discover how strong the influ- is to achieve an optimal fit between the ence of one or more independent variables regression line and the data points. Thus is on one dependent variable. With regard the regression line is an indicator of the to life aims, it is thus possible to determine relationship between characteristic X which independent variables have the (Satisfaction with financial security) and greatest influence on satisfaction with life characteristic Y (Satisfaction with life). and which have little or no influence. In addition to the regression line, another measure is also calculated to determine the quality of the regression model. This is the coefficient of determination, which shows how well the individual data points fit to the line of regression. The coefficient of determination is always between 0 and 1, and the closer the value is to 1, the better the quality of the regression model. Basi- cally, it can be said that values of 0.5 and above show a stable model with very valid data. A coefficient of determination of 0.59 was a achieved for the data collected in Germany for the Life Aims II study. 35
  • 36. II Macro-economic data for thefour countries Germany, France,Italy and Spain. II.1 Demographic development. Table 11: Children per woman (reproduction rate) 1965 and 2004. Table 8: Total population (mean) 1965 2004 today and 2050. Germany 2.5 1.3 in million 2005 2050 France 2.8 1.9 Germany 82.9 75.1 Italy 2.7 1.3 France 60.6 64.0 Spain 2.9 1.2 Italy 58.2 52.3 Source: National statistics offices Spain 42.9 53.2 Source: National statistics offices II.2 Economic situation. Table 9: Life expectancy of men and women • Germany: In the last 10 years economic (years) today and 1960. growth has been significantly slower than in the other EU states. 1960 2005 • France: The economy has picked up since in years Men Women Men Women 2003 but high unemployment is a significant problem. Germany 66.9 72.4 75.6 81.3 • Italy: Economic growth is slower than the France 66.9 73.6 76.7 83.8 EU average, unemployment is relatively high, and public debt is high. Italy 67.2 72.3 77.8 83.7 • Spain: Economic growth is strong and above Spain 67.4 72.2 77.7 84.0 the EU average (thanks to private demand), Source: National statistics offices yet unemployment is high. Table 10: Dependency ratio today and 2050: Table 12: Macro-economic ratios for all Number of people aged 65 and over countries. per 100 people aged 15–64 (people of working age). GDP growth 2005 (real). Germany 1.0 2005 2050 France 1.6 Germany 28.5 51.0 Italy – 0.1 France 25.0 51.4 Spain 3.3 Italy 29.7 63.2 Spain 24.5 55.1 Source: National statistics offices36
  • 37. Life Aims II, 2005: Appendix.Disposable income of private households II.3 Social security systems:per capita 2004 (in EUR). Organization of pensionGermany 16,700 systems.France 16,300 Germany.Italy 15,400 • 3-pillar system (state pension, companySpain 11,900 pension, personal pension) • State pension: compulsory pension scheme financed by pay-as-you-go tax contributionsUnemployment rate 2005 (EU definition). • Various reforms intended to stabilizeGermany 9.6 % the financial situation: 2004 suspension of pensions adjustment, basic pensionFrance 9.6 % (Rürup pension)Italy 7.7 % • Personal pension plans: Riester, basic pensionSpain 9.4 % • 5 ways of organizing pensions through companiesAmount of tax paid.Germany 21.5 % France. • 3-pillar system (state pension, companyFrance 27.7 % pension, personal pension)Italy 30.1 % • State pension: compulsory pension scheme financed by pay-as-you-go tax contributionsSpain 23.0 % • Company pension schemes: ARRCO, AGIRC • 2004: introduction of individual retirementAmount of tax paid plus contributions. savings plans, e.g. PERCO, an importantGermany 36.0 % pension product • No reforms planned in the immediate futureFrance 44.0 %Italy 42.6 % Italy. • 3-pillar system (state pension, companySpain 35.6 % pension, personal pension) • State pension: compulsory pension schemeHome ownership rate 2004. financed by pay-as-you-go tax contributionsGermany 43 % • Second and third pillars not currently well developedFrance 57 % • Reforms have been planned but not imple-Italy 73 % mented for years, current further delay in implementation, due in Autumn 2005Spain 87 % Spain. • 3-pillar system (state pension, company pension, personal pension) • State pension: compulsory pension scheme financed by pay-as-you-go tax contributions • Company and personal pensions rare • No debate on pension reforms (despite evidence that population is aging) 37
  • 38. III Survey results. III.1 Results – Comparison of countries.Personal life aims. Question 3: Now l’d Having a good education/training. Enjoying life right now.like to mention severalpossible personal life Germany: 88% Germany: 73%aims. Please tell me how Germany: 66% Germany: 47%important these are to France: 73% France: 80%you. France: 45% France: 43% Question 3a: And to Italy: 88% Italy: 79%what extent would you Italy: 43% Italy: 32%say you have been able Spain: 88% Spain: 82%to achieve this aim so far? Spain: 46% Spain: 45% Living healthily. Owning my own home. Germany: 70% Germany: 60% Germany: 39% Germany: 51% France: 74% France: 74% France: 44% France: 57% Italy: 88% Italy: 87% Italy: 44% Italy: 65% Spain: 91% Spain: 86% Spain: 53% Spain: 66% Financial security for the future/old age. Being in a long-term relationship. Germany: 78% Germany: 80% Germany: 34% Germany: 72% France: 73% France: 74% France: 32% France: 60% Italy: 86% Italy: 77% Italy: 26% Italy: 68% Spain: 78% Spain: 73% Spain: 32% Spain: 68% Having my own children. Individuality and the ability to make my own decisions. Germany: 75% Germany: 63% Germany: 75% France: 81% Germany: 53% France: 55% France: 54% Italy: 81% France: 35% Italy: 59% Italy: 77% Spain: 78% Italy: 42% Spain: 61% Spain: 74% Spain: 50%38
  • 39. Life Aims II, 2005: Appendix.Career development. Civic engagement.Germany: 65% Germany: 30%Germany: 41% Germany: 28%France: 62% France: 34%France: 33% France: 24%Italy: 76% Italy: 66%Italy: 33% Italy: 25%Spain: 77% Spain: 32%Spain: 34% Spain: 22% All respondents (N = approx. 1,000 each country).Having enough opportunity for leisure activity Top 2 boxesand personal hobbies.Germany: 62%Germany: 41%France: 63%France: 35%Italy: 65%Italy: 29%Spain: 75%Spain: 43%Discovering the world – travel abroad.Germany: 38%Germany: 24%France: 44%France: 20%Italy: 63%Italy: 17%Spain: 47%Spain: 20% Financial security for the future and old age is the life aim where there is by far the greatest discrepancy between importance and achievement. 39
  • 40. Top box (6+7)Life aims.Question 3: Now l’dlike to mention severalpossible personal lifeaims. Please tell me howimportant these are toyou. Europe Germany France Italy Spain Having a good education/training 84% 1 6 1 2 Living healthily 81% 7 3 1 1 Financial security for the future/ old age 79% 3 6 4 5 Having my own children 79% 5 1 5 5 Enjoying life right now 78% 6 2 6 4 Owning my own home 77% 10 3 3 3 Being in a long-term relationship 76% 2 3 7 10 Individuality and the ability to make my own decisions 70% 4 10 7 9 Career development 70% 8 9 9 7 Having enough opportunity for lei- sure activity and personal hobbies 66% 9 8 11 8 Discovering the world – travel abroad 48% 11 11 12 11 Civic engagement 41% 12 12 10 12 Having a good education, financial security and having one’s own children are some of the most important life aims.40
  • 41. Life Aims II, 2005: Appendix.Factors which influence the achievementof life aims.You personally. Politics/government. Question 4: To what extent would you say theGermany: 80% Germany: 28% achievement of your aims depends on theFrance: 71% France: 12% following persons and/or institutions?Italy: 75% Italy: 25%Spain: 80% Spain: 15%Family. Friends/acquaintances.Germany: 55% Germany: 23%France: 57% France: 36%Italy: 59% Italy: 27%Spain: 63% Spain: 36%Your employer.Germany: 40%France: 29%Italy: 35%Spain: 43%Economy.Germany: 39%France: 28%Italy: 44%Spain: 48% In Germany, the expectations of the state are higher than in France or Spain, where friends and acquaintances have more influence. 41
  • 42. Top box (6+7) Middle box (4+5) Low box (1–3)Satisfaction with life. Very satisfied Very dissatisfiedQuestion 1: If you take alook at your life so far, Germany 52% 40% 8%how satisfied are you ingeneral with your life? France 42% 51% 7% Italy 49% 44% 7% Spain 56% 37% 7% People in Spain are most satisfied with their lives, followed by people by people in Germany.42
  • 43. Top box (6+7) Life Aims II, 2005: Appendix.Worries about old age. Own health/illnesses. Question 28: When you think about your future, Germany: 48% what causes you to be most concerned with France: 45% respect to old age? Italy: 63% Spain: 84% Europe: 60% Environmental pollution/climate change. Germany: 44% France: 55% Italy: 62% Spain: 74% Europe: 59% Financial provision for family members and children. Germany: 39% France: 53% Italy: 59% Spain: 69% Europe: 55% General economic development. Germany: 49% France: 46% Italy: 53% Spain: 65% Europe: 54% 43
  • 44. Change in societal values, social coldness. Own financial security. Germany: 42% Germany: 32% France: 46% France: 38% Italy: 56% Italy: 43% Spain: 62% Spain: 63% Europe: 51% Europe: 44% Limited mobility. Accommodation/level of rents. Germany: 34% Germany: 22% France: 45% France: 24% Italy: 49% Italy: 28% Spain: 76% Spain: 55% Europe: 51% Europe: 32% War/terrorist attacks. Germany: 28% France: 36% Italy: 58% Spain: 64% Europe: 46% Loneliness (in old age). Germany: 32% France: 38% Italy: 47% Spain: 62% Europe: 45% People’s key concerns are their own health and environ- mental pollution/climate change. People in Spain worry most.44
  • 45. Top box (6+7)Financial provision for a long life. I have made (very) good provision. Question 29: Average life expectancy is rising continually, so you will Germany: 33% probably live longer than the generations before you. Consequently, you will have a greater need France: 17% to make personal pro- vision for your retirement. Do you think that you have already made good Italy: 20% provision for living longer? Spain: 26% A third of the German population believe that they have provided well for the future, however long they may live. 45
  • 46. Top box (6+7) Middle box (4+5) Low box (1–3)Willingness to give up some consumerexpenditure to provide for the provision. Have you already given up some current Would you be prepared to forgo some current consumption? consumption? Yes, I would be totally No, I would not be at all Yes prepared to do so prepared to do so Germany 63% 27% 30% 43% France 36% 6% 16% 33% 51% Italy 32% % 15% 36% 49% Spain 30% % 20% 29% 51% Question 26: Have you Group: Question 24: In principle, already given up some Not yet retired. would you be prepared things in order to make to forgo some current personal provision for consumption to provide your future/your old age? for the future (i. e. your expenditure on living expenses, leisure time, hobbies and vacations)? More people in Germany than anywhere else forgo consumer expenditure to make personal provision.46
  • 47. Top box (6+7) Long-term financial planning. Taking precautions Question 7: Now I would I regularly put a little money away for emergencies. like to read you a few statements about long- term financial planning. Can you tell me which of I have supplementary nursing insurance/supplementary these are true for you? health insurance in case of unexpected illness.* I have arranged long-term personal provision with a financial expert (from banking, insurance). Every month I invest at least 10% of my net income in my personal provision. Every month I save a certain amount for purchases and travel. 0% 10% 20% 30% 40% 50% 60% 70% Germany France Italy Spain* Due to special situation in France, where state pensions exist but benefits are limited. There are obvious differences between the four countries as regards long-term financial planning … 47
  • 48. Top box (6+7)Long-term financial planning.Question 7: Now I would Informedlike to read you a few I have already had someone calculate my state pension.statements about long-term financial planning.Can you tell me which of I know exactly how much money I will have available whenthese are true for you? I reach retirement age. Not taking precautions I have not yet made sufficient provision for old age, but I know I should do something about that. Right now, I can only just survive on my income, so I have no way of contributing to a personal provision plan. Im not concerned about my situation when I reach retire- ment age because I have already made good provision 0% 10% 20% 30% 40% 50% 60% 70% for the future. Germany France Italy Spain … and people in Germany have made the highest level of personal provision.48
  • 49. Financial products for personal provision.Insurance. Private health insurance. Question 9: If you were asked today to chooseLife insurance (incl. term life insurance). Germany: 47% financial products forGermany: 62% personal provision, which France: 31% of the following financialFrance: 60% products would you Italy: 38% choose to provide forItaly: 53% your future? Spain: 21% Basis: n = excludingSpain: 31% “Not sure” answers. Riester pension.Occupational disability insurance. Germany: 24%Germany: 61%France: 31%Italy: 32%Spain: 24% Individual pension saving plans.Personal pension.Germany: 59%France: 47%Italy: 40% Spain: 41%Spain: 26% Guaranteed private provision plan.Company pension.Germany 57%France: 26%Italy: 33% Spain: 14%Spain: 23%Supplementary nursing insurance.Germany: 55%France: 67%Italy: 34%Spain: 12% % 49
  • 50. Financial investments. Financial investment (e. g. savings plans, savings account) Germany: 66% France: 67% Italy: 58% Spain: 30% Investment funds. Germany: 43% France: 26% Italy: 40% Spain: 23% Stocks/shares. Germany: 28% France: 30% Itay: 20% Spain: 14% Building loan agreement. Germany: 54% France: 54% Spain: 18% Old-age provision: Insurance and pension schemes dominate – investment funds and stocks/shares still play a less significant role.50
  • 51. Top box (6+7) III.2 Results – Germany.Personal life aims and degree of achievement. 88% Having a good education/ Question 3: Now I’d 28% 72% training like to mention several possible personal life 80% Being in a long-term relationship aims. Please tell me how 16% 84% important these are to 78% Financial security for the future/ you. Basis: n = 1,003. 60% 40% old age Question 3a: And to 75% Individuality and the ability to what extent would you 35% 65% make my own decisions say you have been able 75% Having my own children to achieve this aim so far? 20% 80% Basis: n = 1,003. 73% Enjoying life right now 44% 56% 70% Living healthily 50% 50% 65% Career development 49% 51% 62% Having enough opportunity for leisure 45% 55% activity and personal hobbies 60% Owning my own home 27% 73% 38% Discovering the world – travel abroad 54% 46% 30% Civic engagement 28% 72% Poorly achieved Well achieved Financial security for the future/old age is the aim which the least people have achieved. 51
  • 52. Top box (6+7) Middle box (4+5) Low box (1–3)Satisfaction with some aspects of life. Very satisfied Very dissatisfiedQuestion 2: Now I’m Your family, your friendsgoing to list some aspects 72% 22% 6% and acquaintancesof your life. Would youplease tell me how Your healthcaresatisfied you are actually 45% 37% 18%in each instance?Basis: excluding Your time for leisure“Not sure” answers. 45% 37% 18% and hobbies Your financial provision 28% 44% 28% for the future/old age General economic 15% 41% 44% conditions Political environment 3% 26% 71% People are most satisfied with their family and friends and least satisfied with the economic and political environment.52
  • 53. Top box (6+7)Worries about old age.General economic development in Germany. Question 28: When you think about your future, what causes you to be most concerned withOwn health/illnesses. respect to old age? Basis: excluding “Not sure” answers.Environmental pollution/climate change.Change in societal values, social coldness.Financial provision for family members and children.Limited mobility.Loneliness (in old age).Own financial security.War/terrorist attacks.Accommodation/level of rents. 0% 10% 20% 30% 40% 50% 60% 70% Under 29 years 30 to 49 years Over 50 years With the exception of concerns about financial security, young people worry less than others about their old age. 53
  • 54. Top box (6+7) Political reforms. Question 22: Personal I feel very well informed financial planning is cur- 10% about political reforms. rently a topic of numerous political reforms. How I will have to take on well informed are you 94% responsibility for providing for my own future.* about the effects of these political reforms in general ? Basis: n = 1,000 excluding “Not sure” answers. Question 23: And how much faith do you have in these political reforms? Do you believe that the reforms of the state social-security system will leave you adequately provided for in the future or do you think that you will have to take on responsibility for your personal provi- sion? Basis: n = 819 excluding “Not sure” answers.* Group not yet retired. People feel ill-informed and worry about political reforms. 54
  • 55. Top box (6+7) Middle box (4+5) Low box (1–3) Long-term financial planning and general conditions. very important not at all important Question 6b: If you nowLong-term financial think about your personalplanning is … 62% 27% 11% financial situation, do you believe that long-term financial planning is important for achieving clearly improved clearly deteriorated your life aims?General conditions for Basis: n = 1,000 excluding “Not sure” answers.achieving my aims haveimproved over the last 27% 46% 27%five years … Question 6a: Altogether: Have the general condi- tions for achieving your aims improved or deteri- orated for you over the last five years or has nothing changed? Basis: n = 995 excluding “Not sure” answers. Long-term financial planning is important, but the conditions for achieving this are not improving. 55
  • 56. Life aim of financial securityfor the future.Group: Convinced they will achieve Group: Not convinced they will achievetheir aim. their aim. Socio-demographic aspects 53% Up to 29 years 18% 41% 30 to 49 years 49% 6% % 50 years and over 32% Capital investment assets 72% less than 10,000 EUR 79% 44% Low income 52% 49% Average income 43% 7% % High income 5% Under-30s are optimistic about achieving their goal of being financially secure in the future.56
  • 57. Top box (6+7)Long-term financial planning.Taking precautions Question 7: Now I wouldI regularly put a little money away for emergencies. 48% like to read you a few statements about long- term financial planning.I have supplementary nursing insurance/supplementary Can you tell me which ofhealth insurance in case of unexpected illness. 39% these are true for you? n = 1,003.I have arranged long-term personal provision with afinancial expert (from banking, insurance). 39%Every month I invest at least 10% of my net income inmy personal provision. 37%Every month I save a certain amount for purchasesand travel. 32%InformedI have already had someone calculate my state pension. 50%I know exactly how much money I will have availablewhen I reach retirement age. 31%Not taking precautionsI have not yet made sufficient provision for old age, but Iknow I should do something about that. 27%Right now, I can only just survive on my income, so I have noway of contributing to a personal provision plan. 25%I’m not concerned about my situation when I reach retirementage because financially, I’m very well provided for. 20% Only a small proportion of the population has actually made long-term financial plans. 57
  • 58. Top box (6+7) Middle box (4+5) Low box (1–3)Long-term financial planning. An index for actual long-term financial planning was developed on the basis of 4 important variables.* Top score: 23% Good long-term provision (67 to 100 %) Middle score: 27% Some long-term provision (34 to 66 %) Low score: 50% No long-term provision (0 to 33%) Statements. • Every month I invest at least 10 % of my net income in my personal provision. • I know exactly how much money I will have available when I reach retirement age. • I have arranged long-term personal provision with a financial services expert (bank, insurance). • I have supplementary nursing insurance/supplementary health insurance in case of unexpected illness. * The maximum possible score is 100 %. The variables have been weighted according to their importance (x3, x2, x1). A large percentage of the German population has not made any personal provision for the future.58
  • 59. Top box (6+7)Satisfaction depending on levelof provision made.Overall satisfaction with life. Satisfaction with financial security for the future/old age. 59% Good provision 45% 51% Some provision 25% 50% No provision 21% There is an obvious link between financial planning and satisfaction with life. 59
  • 60. Top box (6+7)Satisfaction with life. 80% 60% 40% 20% 0% Up to 29 years 30 to 49 years 50 years and older Good provision Bad provision Only when people are younger does insufficient personal provision not have a negative effect on their satisfaction with life.60
  • 61. Satisfaction with current long-termfinancial plans.Group: (very) satisfied with long-term Group: (very) dissatisfied with long-termfinancial plans. financial plans. Socio-demographic aspects Capital investment assets 30% less than 10.000 EUR 76% 57% Employed 39% 11% % Up to 29 years 28% 46% 30 to 49 years 42% 43% 50 years and older 30% 16% Low income 52% 64% Average income 44% 19% High income 5% The respondents who are dissatisfied with their long-term financial plans are those who are younger and/or have lower incomes. 61
  • 62. Top box (6+7)Satisfaction with current long-termfinancial plans.Group: (very) satisfied with long-term Group: (very) dissatisfied with long-termfinancial plans. financial plans. Behavoir Every month I invest at least 10% of my 57% net income in my 14% personal provision. I have supplementary nursing insurance/supplementary 51% health insurance in case of 20% unexpected illness. I have arranged long-term personal provision with 55% a financial expert (from 15% banking, insurance). 42% I know exactly how much 43% money I will have available when I reach retirement age. 23% The respondents who are satisfied with their long-term financial plans have done significantly more to provide for their futures.62
  • 63. Satisfaction with advice and influence onlong-term financial planning. Correlation of voiced satisfaction with actual satisfaction. All data in % – correlation. 60% Partner/spouse Family 40% My personal bank advisor My personal My own research My bank insurance advisor My insurance company Consumer bureaus Friends/colleagues 20% Voiced satisfaction Independent financial advisors/brokers 0% 0,1 0,2 0,3 0,4 Actual satisfaction People value advice from those close to them, yet when it comes to satisfaction with long-term financial plans, those who value advice from financial services experts are actually more satisfied. 63
  • 64. Willingness to give up some consumer expenditure to provide for the future. Question 26: Have you already given up some 18% do not forgo expenditure and would things in order to make not be prepared to forgo any. personal provision for your future/your old age? 38% forgo some expenditure and would Question 24: In principle, would you be prepared be prepared to forgo more. to forgo some current consumption to provide 18% do not forgo any expenditure but for the future (i.e. your expenditure on living would be prepared to forgo some. expenses, leisure time, hobbies and vacations)? 26% forgo some expenditure but would* Group: Not yet retired. not be prepared to forgo more. 82 % already forgo or would be prepared to forgo some consumer expenditure to invest in personal provision for old age. 64
  • 65. Income at particular stages of life.Young families (18–40) Single parent with Single, 35–49 Single, 50–65with at least 2 children child (24–40) Low income 9% 48% 45% 62% up to 1,500 EUR Average income 77% 48% 48% 36% 1,501–4,000 EUR High income 14% 4% 7% 2% over 4,001 EUR Capital investment assets 40% 65% 56% 45% less than 10,000 EUR Single parents and older persons who are single have lower incomes and thus little financial latitude for personal provision. 65
  • 66. Imprint. Marc Savani, marc.savani@dit.de Deutscher Investment-Trust Gesellschaft fürLife Aims II, 2005 – People in Germany, France, Wertpapieranlagen mbH (dit),Italy and Spain Corporate Communications,November 2005 Frankfurt /Main, GermanyPublisher: Dr. Markus Schwarzer,Allianz AG markus.schwarzer@allianz.deKöniginstrasse 28 Allianz Lebensversicherungs-AG,80802 Munich, Germany Corporate Communications, Stuttgart, GermanyMarket research institute: Christian Teichmann,GfK Marktforschung GmbH, Nuremberg, Germany christian.teichmann@mondial.deProject managers: Karsten John, Mondial AssistanceDivision Manager, Financial Market Research Corporate Communications, Munich, GermanyBirgit Ströhlein,Research Consultant, Financial Market Research Valerio Vagone, valerio.vagone@rasnet.it RAS – Riunione Adriatica di Sicurtà,Allianz AG project team: Comunicazione e Immagine, Milan, ItalyNicolai Tewes, nicolai.tewes@allianz.comConstanze Mayer Macro-economic data:Allianz AG, Group Communications, Dr. Michael HeiseMunich, Germany Dr. Renate Finke Dr. Michaela GrimmDr. Martin Marganus Dr. Mathias MoerschFolker Michaelsen Dr. Jürgen StanowskyAllianz AG, Methods & Controlling, Allianz AG, Group Economic ResearchMunich, Germany Frankfurt /Main and Munich, GermanyBérangère Auguste-Dormeuil, Design:berangere.auguste-dormeuil@agf.fr SchumacherGebler KG, Munich, GermanyAGF, Head of Communications, Paris, France Print:Martin Bendrich, martin.bendrich@allianz.de Walter Biering GmbH, Munich, GermanyAllianz Versicherungs-AG,Corporate Communications, Munich, Germany Disclaimer/Copyright This study, including its results, findings andKarl-Friedrich Brenner, contributions, is protected by copyright.karl-friedrich.brenner@dresdner-bank.com Reproduction, dissemination and publishing ofDresdner Bank AG, the study, including abstracts thereof, is subjectMedia Relations, Frankfurt /Main, Germany to written approval from Allianz AG. All other rights are reserved.Ulrich Hartmann, ulrich.hartmann@allianz.deAllianz Private Krankenversicherungs-AG,Corporate Communications, Munich, GermanyGünter Kast, guenter.kast@allianzgi.comAllianz Global Investors AG, Munich, GermanyJean-Louis Liedana Malga,jeanlouis.liedana@allianz.esAllianz, Compania de Seguros y Reaseguros, S. A.Subdireccion General, Barcelona, Spain 67
  • 67. www.allianz.comAllianz AGGroup Communications