Aviva’s second ‘Mind the Gap’ report: Europe’s pension savings gap surpasses €2 trillion a year

  • New findings from Aviva reveal that Europe’s pension savings gap remains a growing issue
  • As European Governments grapple with public debt levels and the wider challenges of an ageing population, individuals will need to take greater responsibility for their own future retirement income
  • Younger people have the greatest opportunity to address their pension savings gap by starting to save as soon as they can

LONDON, 09-Sep-2016 — /EuropaWire/ — Europe’s pension savings gap remains substantial, surpassing €2 trillion a year, at 13% of the European Union’s 2016 GDP, according to the results of Aviva’s second ‘Mind the Gap’ report.

David McMillan, Chief Executive Officer, Aviva Europe said:

“At an eye-watering €2 trillion, Europe’s annual pension savings gap is significant, growing and is now one of the most pressing long-term policy issues facing governments and individuals across the region.

“No single policy measure will close the gap alone, urgent action is required on four different fronts – building pension systems that offer stability, increasing access to pensions, better pension information, and helping individuals take informed decisions. Governments, companies and individuals can work together to bridge the gap, but there is no time for delay if we want future generations to have a secure and prosperous retirement.”

Aviva’s report analyses the additional savings that people retiring between 2017 and 2057 need every year to fill the gap between the pension they can currently expect to receive and the income required to have an adequate retirement . With 28% – or 148.3m, of Europe’s population due to be over 65 by 2060 , unless the shortfall in retirement savings is addressed, millions of people across Europe may not have a financially secure retirement, which may potentially result in a dramatically reduced standard of living.

The 2016 report reveals a mixed picture across the eight European Union countries examined. In the UK, although the pension savings gap has fallen from €379 billion (£318bn) to €365 billion (£306bn) since 2010, in part due to the success of auto-enrolment, it remains significant. In contrast, an increasing pension savings gap is emerging in countries such as Ireland, where the gap stands at €28 billion, partly due to the state pension freezing between 2010 and 2015. In Spain, the pension savings gap has increased to €192 billion, due to caps on increases to the state pension and an increased number of people expected to retire in the future. Spain faces one of the biggest savings challenges with the annual savings gap reaching 17% of GDP.

Pensions saving gap by country


2016 Pensions Savings Gap (€ billions)

2010 Pensions Saving Gap  (€billions) Difference 2010/2016 % Annual Pension savings Gap as % of country’s  GDP
Germany 461 469 -2 15
UK 365 379 -4 13
France 241 244 -1 11
Spain 192 171 12 17
Turkey 125 91 38 19
Italy 99 98 1 6
Poland 65 69 -6 14
Ireland 28 20 38 13
Lithuania 5.4 5 9 13
EU28 €2.01 trillion €1.9 trillion 6 13

Note: The pensions saving gap figures are nominal and are not inflation adjusted.

Aviva’s research emphasises the importance for those in their early adult lives to think about how they will fund their retirement. People may use a variety of strategies, including working to an older age, however individuals starting a pension savings plan as early as possible can also benefit from the compounding effect of interest from saving over a longer timeframe. For example, the report estimates that in Ireland the average 20 year-old could need to save an extra €4,400 a year but a 50 year-old could have to save more than double that at €9,700 a year to reach the same level of income in retirement. Where eligible some of the additional savings may come from employer contributions or tax relief – to recognise an individual’s own circumstances Aviva’s report encourages people to “Find their gap” by working out what their own pension savings gap might be, take action and #savesmarter.

Recommendations to address the European pension savings gap

Aviva calls on European policymakers to work in partnership with the private sector to establish a stable framework that encourages a savings culture, provides a minimum income for all and builds a more secure platform for individuals to plan for their retirement through:

Pensions systems that offer stability:

  • Pension reforms that are evidence-based with political consensus
  • Tax incentives that are durable and understandable

Increased access to pensions:

  • introduce automatic enrolment with an employer contribution
  • share learnings of current auto-enrolment programmes and build on scope, adequacy and engagement

Clear and simple communication and information:

  • provide citizens with a consolidated view of their pension savings and an estimate of their retirement income
  • build on technological progress to explore digital solutions, such as pension calculators and dashboard, to contribute to citizens’ understanding of their saving needs

Building individuals’ capability to take decisions by:

  • Introducing financial education into the national curriculum
  • Developing ‘rules of thumb’ that act as common standards with industry and partners to give individuals a sense of how much they need to save and the best way to go about this.

The full Aviva Mind the Gap report is available on www.aviva.com/europe-pensions-gap/.


Yasmin Saleh +44 (0) 207 662 8710

Public Policy
Victoria Roberts +44 (0) 207 662 3954
Notes to editors:

  • Aviva has worked with Deloitte to ensure this research uses recent, established sources and a robust methodology to estimate the pension savings gap. Deloitte’s model necessarily makes a number of assumptions and in some cases simplifications but still aims to reach a fair and reasonable comparison for discussion.
  • The methodology employed to quantify the pensions gap is based on bottom up analysis of Germany, Spain, France, Ireland, Italy, Lithuania, Poland, Turkey and the UK.
  • The report focuses on pensions as they are designed to enable people to save for retirement over the long term.
  • The report does not take account of other assets such as housing, cash deposits or other investments. Individuals may use these assets instead of, or on top of, pensions to provide an adequate retirement income.
  • Further information on methodology used can be found on www.aviva.com/europe-pensions-gap.

About Aviva

  • Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers, across 16 markets worldwide.
  • In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.
  • Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages £319 billion in assets.
  • Aviva helps people save for the future and manage the risks of everyday life; we paid out £30.7 billion in benefits and claims in 2015.
  • By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.
  • The Aviva media centre at http://www.aviva.com/media/ includes company information, images, and a news release archive.
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[i] Source for GDP: Estimated 2016 GDP GDP in current prices, World Economic Outlook Database, IMF, October 2015.

[ii] This research assumes a 70% replacement rate for the ‘average’ individual as recommended by the Organisation of Economic Cooperation and Development (OECD). “It is reasonable to consider the 70% rate as the adequate retirement income benchmark for the average individual that will allow the individual to enjoy a standard of living in retirement that is similar to the standard he or she enjoyed prior to retirement.” Private Pensions Outlook, OECD, 2008.

[iii] The 2015 Ageing Report: Underlying Assumptions and Projection Methodologies (European Commission, 2015).

SOURCE: Aviva plc

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