Retirement readiness – preparing for the future

of pensionsThurstan Robinson

1

The world is changing

Ageing populations are rising globally…

Average Life Expectancy (in years)

And the trend does not seem to be slowing

More than you may think…

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

Current 2050

Low Expected High Low Expected High

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

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

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

How long are we going to live?

……and working populations are decreasing

2People can see change coming

Widespread pessimism about retirement

Q. How confident are you that you will be able to fully retire with a lifestyle you consider comfortable? Source: AEGON.

Poland

Hungary

France

Spain

Germany

The Netherlands

United Kingdom

Sweden

USA

Total

46%

24%

37%

33%

23%

30%

27%

24%

21%

29%

20%

31%

16%

12%

19%

9%

12%

6%

13%

15%

20%

14%

14%

23%

25%

24%

29%

33%

31%

24%

3%

4%

2%

5%

8%

5%

7%

6%

12%

6%

Somewhat pessimistic Very pessimistic Somewhat optimistic Very optimistic

48% female and 40% male arevery/somewhat pessimistic

3But people are not yet ready for change

Born in 1940Pensions are important and the system is DB. Expects to retire at 65 and live for a further 15 years.

Born in 1970Pensions have been uninteresting. Hopes to retire in his late 60s and live for a further 20 years.

Born in 2000Pensions are important. Will learn from mistakes of parents’ generation. Will have fewer expectations about retirement age, but will live to at least 90 years.

Old habits die hard?

DB pensions

DC pensions

Complexity for the Individual

Overall, women are less prepared for retirement

Source: AEGON.

Low62%

Medium32%

High5%

WomenMen

Overall, women are less prepared for retirement

Low49%Medium

42%

High9%

Retirement ages not shifting despite pessimistic outlook

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

Total

Germ

any

Franc

e

The N

ethe

rl...

United

Kin.

..

Poland

Spain

Hunga

ry

Sweden

USA

65 65 65 67 66 65 67 65 65 67

2015 17 15 16 18 16 20 20 20

Full retirement Years in retirement

26% of respondents envisage retiring at 65

Little variation in expected retirement age based on gender, age, income or education

Source: AEGON.

4How can companies help?

Corporate pensions are becoming more important

– State pensions cut back• Increasing pension age• Decreasing pension payments• Increasing pension contributions

– Employees will look to employers for support• Education• Contributions• Appropriate investment opportunities

‘With DC pensions, I am concerned that employees may feel that they don’t have sufficient savings and will look to the company to compensate them. The issue is about delivering DC more intelligently. There is much more to be done.’

“”Head of international benefits and compensation, major multinational interviewed for AEGON Global Pensions Pensions in Europe Survey

Making a differenceHave a plan, use it

• Engage and motivate

• Support employees

• Provide appropriate investment solutions

• Auto-enrol?

• Auto-escalate?

• Flexible retirement?

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Helping employees to help themselves

Every plan is a DB plan…

DB Retirement

DC Retirement

$$$$$$

$$$$$$

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Any Questions?

Contact InformationDr Thurstan RobinsonAEGON Global Pensions

thurstan.robinson@aegon.comwww.aegonglobalpensions.com