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May 29, 2014

Workers worldwide not confident they will retire comfortably: Survey

Few employers facilitate phased transition to retirement
    
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There is increased optimism among workers around the world about improvements in their local economies, according to a survey of 16,000 workers and retirees in 15 countries (including Canada) by nonprofit Transamerica Center for Retirement Studies (TCRS) in association with Aegon.

Twenty-eight per cent of workers expect their country’s economy to improve in the coming year — up from 19 per cent in 2013. Optimism is highest in 2014 in Brazil (69 per cent) and India (48 per cent) and lowest in Germany and France (both 12 per cent).

However, there is a continuing, widespread lack of confidence about retirement prospects, according to Catherine Collinson, president of TCRS.

Only 19 per cent of respondents are “very” or “extremely” confident they will be able to fully retire with a comfortable lifestyle. Confidence levels are highest in China (41 per cent) and especially low in Europe, with just six per cent in France and four per cent in Poland.

Simplifying the decision-making around the process of saving can help increase savings rates, said Collinson, and globally, 63 per cent of workers find the notion of automatic enrolment to be appealing.

When workers were asked what they felt would be a reasonable amount to contribute if they were automatically enrolled into an employer’s retirement plan, the average response was six per cent of annual pay.

“Employers can make a tremendous difference in helping their employees save for retirement by implementing automatic enrollment — and setting the default contribution rate at six or seven per cent. Moreover, they can encourage employees to save even more with an automatic escalation feature which increases savings rates over time,” said Collinson. “By doing so, they are making it easy for their employees to save.”

Only 12 per cent of workers globally have a written strategy for retirement, while 44 per cent have some sort of informal plan, four per cent “do not know” and 40 per cent said they have no plan at all.

Many workers envision some kind of phased transition into retirement. Just one in three (32 per cent) plan to immediately stop working and fully retire. In the U.S., even fewer (24 per cent) plan to do so.

In European countries, such as Spain (52 per cent) and France (51 per cent), which have histories of compulsory retirement, workers are more likely to plan to stop immediately.

But only 23 per cent of workers said their employers facilitate transitioning from full-time to part-time

The surveyed countries were: Brazil, Canada, China, France, Germany, Hungary, India, Japan, the Netherlands, Poland, Spain, Sweden, Turkey, the United Kingdom and the United States.

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