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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 identifies commonalities and differences.
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Life Aims II, 2005.
People in Germany, France, Italy and Spain.
Index.Editorial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
About the Life Aims II study. . . . . . . . . . . . . . . . . . . . . 4
1 Background information on the countries
in the study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Demographic development. . . . . . . . . . . . . . . . . . 5
1.2 Economic situation. . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Social security systems and reforms. . . . . . . . . . . 9
1.4 Media and public opinion. . . . . . . . . . . . . . . . . . . . 12
2 Results – Comparison of countries. . . . . . . . . . . . 13
2.1 Life aims: Savoir vivre or a good education. . . . . 13
2.2 Satisfaction with life: Spaniards lead the field. . . 14
2.3 Long-term financial planning and
personal provision. . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Expectations of financial service providers. . . . . . 17
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3 Results – The situation in Germany. . . . . . . . . . . . 20
3.1 Life aims: Good education most frequently cited
life aim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Satisfaction with life: Satisfaction depends on
achieving life aims. . . . . . . . . . . . . . . . . . . . . . . . . 23
3.3 Long-term financial planning and personal
provision: in their infancy. . . . . . . . . . . . . . . . . . . 25
3.4 Expectations of financial service providers: Trust
rather than competence? Trust and competence! 26
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4 Results – Specific demographic groups in
Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1 Young adults (18 –25 years). . . . . . . . . . . . . . . . . . 27
4.2 From people starting a family to the
“sandwich generation”. . . . . . . . . . . . . . . . . . . . . . 29
4.3 50-plus generation. . . . . . . . . . . . . . . . . . . . . . . . . 31
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
I Study objectives and methodology. . . . . . . . . . . . 33
I.1 Methodological approach. . . . . . . . . . . . . . . . . . . 33
I.2 Rating scale used. . . . . . . . . . . . . . . . . . . . . . . . . . 34
I.3 Type of analysis used. . . . . . . . . . . . . . . . . . . . . . . 34
II Macro-economic data for the four countries
Germany, France, Italy and Spain. . . . . . . . . . . . . 36
II.1 Demographic development. . . . . . . . . . . . . . . . . . 36
II.2 Economic situation. . . . . . . . . . . . . . . . . . . . . . . . . 36
II.3 Social security systems: Organization of
pension systems. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
III Survey results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Imprint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
3
Life Aims I I, 2005: Editorial.
Editorial.
Dear Readers,
As we grow up, each and every one of usdevelops life aims which influence how welive our lives. These may change a little overtime, depending on what turns life takes,but as a rule they are a stable frameworkwhich we depend on to guide us throughlife. This study explores these life aims andhow people feel about them at this momentin time.
Germany, Italy, France and Spain have richand diverse cultures, so it was no surprisewhen the survey showed that the four popu-lations have different opinions regardingwhich life aims are most important. Yet, thisstudy shows something else. The countriesare all linked by one common denominator;respondents in all four said that achievingthe life aim of being financially well pro-vided for in old age makes them feel mostuneasy. If they analyze how satisfied theyare with their lives right now, they recog-nize that they have not yet done enough toachieve this aim, and it is becoming moreand more evident to them that it will remainunachievable if they rely on the state pen-sion alone.
Nowadays, the reasons for this are wellknown. Birth rates have been falling formany years and medical advances have ledto increased life expectancy. Consequently,the state pension systems in their currentpay-as-you-go form, funding expenditurefrom current contributions, are being sub-jected to a test of strength. Clearly, theycannot pass this test. The writing is on thewall – reform is inevitable.
This new Life Aims study is a continuationof our research first embarked upon whenAllianz carried out its first study of the lifeaims of people in Germany in 2004. Thistime we have cast the net wider to take inthe views of people living in a further threeEuropean countries. Thus our study hasbecome more international, and the result-ing comparisons have been illuminating.In addition, the methodology of the studyhas been honed so that we are left with adetailed snapshot which reveals the deep-seated opinions, desires and hopes of peoplein our core European markets.
The findings contain an important messageto policymakers. They must continue toencourage people to take responsibility forsetting up their own personal provisionplans for the future. Policymakers must alsogive people the necessary financial freedomto do this so that they can build up a supple-mentary pension secured by capital stock.The baby-boomers of the late fifties andsixties have little time before they reachretirement age.
To achieve the life aim of “financial indepen-dence in old age”, people need and are seek-ing professional advice and help. Allianz hasalways seen itself as a business partnerwhich helps its customers to solve theirfinancial dilemmas efficiently. As this studyshows, the challenges have become biggerand not smaller. This motivates us evenfurther to listen to our customers attentivelyand wherever possible to offer them a com-prehensive solution which is transparent andflexible enough to adapt as people’s situa-tions change.
Best regards,
Michael DiekmannCEO of Allianz AG
4
Life Aims I I, 2005: About the Life Aims II study.
About the Life Aims II study.
Allianz conducted the Life Aims II study todiscover to what extent people living inGermany, France, Italy and Spain believethat satisfaction with life, life aims andfinancial planning are interlinked. Whatkinds of life aims have the greatest effect onhow satisfied people are? What importancedo people attach to achieving particular lifeaims and how likely do they think it is thatthey will achieve those aims? And what roledoes their financial situation play in all ofthis? Allianz commissioned Nurembergmarket research institute GfK to design andcarry out the study.
The first Allianz Life Aims study, publishedin January 2004, polled only people livingin Germany. By contrast, the Life Aims IIsurvey, conducted between June and August2005, included a further 1,000 people ineach of the countries France, Italy andSpain.
We wanted to know: • How prepared people in these four countries
are for a demographic change which is set topush the current pay-as-you-go financedsocial security system to its limits.
• What people think about the reforms whichare necessary and about the changes to howresponsibility for social welfare is dividedbetween the state and themselves.
• Whether the intensive discussion about old-age provision in the German politicalarena and in the German media has ledto greater changes in the knowledge andattitudes of people there than in the otherthree countries.
• Whether the shift in attitudes which seemedto have begun when Life Aims I was carriedout has also led to changed behavior con-cerning personal provision, and if not, whynot.
• Whether these developments have alsoresulted in changed expectations of financialservice providers, and if so, what the expec-tations are.
Our analysis of the study brought to light awhole range of intriguing differences, notonly between people living in different coun-tries, but also between those in different agegroups or at different stages of their lives.For example, people with young families arethe most satisfied with lives, although theygenerally have little disposable income.However, when we look carefully at thisgroup we can see that the extent to whichthey have planned their finances has clearlyinfluenced the extent to which they havebeen able to achieve their life aims and bydefault also affected how satisfied they are(more analysis of the results from Chapter 2onward).
This document summarizes and presentsthe most important results in the chaptersentitled “Results – Comparison of countries”,“Results – Germany”, and „Results – Specifictarget groups”. The special chapter entitled„Background information on the countriesin the study” contains a brief synopsis byAllianz economists of the demographic,economic, political and media climates ofthe four countries where the survey wascarried out. Further information on this canbe found in the Appendix and atwww.allianz.com/lifeaims.
Does money make people happy? What is the link
between long-term financial planning, personal
provision and life aims?
5
Life Aims I I, 2005: Background information on the countries in the study.
More than ever before, the lives of people inthe countries where the study was carriedout are influenced by the changing socio-eco-nomic landscape. The demographic changedue to take place over the next few decadeswill upset the delicate balance between thenumber of people in gainful employmentand the number of those receiving pensions.At the same time, the difficult economic sit-uation is reducing the scope available to pol-icymakers to implement sustainable reformof the social security systems. In this periodof rapid change, the media pay a key role indisseminating information.
In order to get a better picture of howcrucial an influence socio-economic factorsactually are, we analyzed the currentsituation in all four countries.
1.1 Demographic development.
The best measure of demographic develop-ment is known as the dependency ratio,which is defined as the number of peopleaged over 65 divided by the number ofemployable people aged between 15 and 64.In all four countries, this ratio will deterio-rate considerably. While there are currentlystill more than three people in gainfulemployment for every person in retirementin Germany and Italy and indeed four inFrance and Spain, in all four countries thisratio will fall to less than two people inemployment for every person in retirementby 2050 (see Table 1).
However, the extent to which the countrieswill be affected by these changes varies. Italywill be the vanguard of ageing populations.While today there are only three persons inretirement for every ten persons in gainfulemployment, by 2050 this will have increas-
ed to more than six. In Germany the popula-tion pyramid is currently very similar, butits population will age less quickly than thatof Italy; in 2050 there will be five retiredpersons for every ten in gainful employment.
Table 1: Dependency ratio today and in 2050:
Number of over-65s per 100 persons aged
between 15 and 64.
The current population pyramids of Spainand France are slightly less top heavy, asboth countries have dependency ratios ofapproximately 25 percent. However, thedemographic change will also cause these torise considerably. Spain in particular willexperience considerable change. In 2050,Spain’s population will be one of the oldest,second only to Italy. By contrast, populationaging will be slightly less dramatic in France,
1 Background
information on the countries
in the study.
The populations of the four European countries
Germany, Italy, France and Spain will age dramatically
and shrink in the next few years. The countries most
affected by this are Italy and Germany, with Spain
following suit somewhat later. In all four countries,
the demographic change will create an intolerable
burden on social security systems which are currently
funded primarily from current contributions on a
pay-as-you-go basis.
Germany
2005 2050
France
28.5 51.0
25.0 51.4
Italy 29.7 63.2
Spain
Source: National statistics offices
24.5 55.1
where the dependency ratio in 2050 is likelyto be similar to that of Germany.
In all four countries, increasing longevityand a fall in birth rates are the principal rea-sons for the predicted demographic age shift.Life expectancy at birth is around 77 yearsfor males and 84 years for females in all thecountries, which means that in the last 40years life expectancy has risen by about tenyears (see Table 2). This trend is expectedto continue in the next few years, indeeddemographers expect life expectancy toincrease by a further four years in the next30 years.
Table 2: Life expectancy of males and females
at birth (years).
However, the fall in birth rates has beeneven steeper than the increase in lifeexpectancy. While 40 years ago the averagenumber of children per woman was wellabove the figure of 2.1 needed to maintainthe population level, birth rates in all fourcountries have now fallen below that. Ger-many, Italy and Spain have very similar birthrates of between 1.2 and 1.4 children perwoman, but in France the birth rate is quitea lot higher at 1.9 (see Table 3).
Thus the demographic pressure on socialsecurity systems is high in all of the coun-tries. Forecasts of how the age structure willdevelop based on life expectancy and birthrates are relatively precise. If anything, thespeed of medical progress and the accompa-nying increase in life expectancy has beenunderestimated up to now. And even if birthrates recovered, the effects of this would notbe felt immediately, as many years wouldpass before the “extra children” reachedworking age. It is thus quite clear that the
demographic change makes it impossible forpension policymakers to continue “businessas usual”.
Table 3: Birth rates in 1965 and today.
1.2 Economic situation.
Germany.In the last ten years, Germany’s economyhas grown markedly more slowly than thoseof its European neighbors, with annual GrossDomestic Product (GDP) growth regularlybelow the European average since 1995.There are many reasons for this weakgrowth: German reunification, the loss ofcompetitive advantage on the internationalmarket as a result of excessive wage rises inthe early nineties, and a somewhat inflexiblelabor market.
Nevertheless, the extremely unfavorableeconomic situation Germany has sufferedsince 2002 detracts from some importantpositive changes which have taken place inGermany. Many companies have hugelyincreased their competitiveness, a develop-ment reflected in the fact that Germany nowexports more than any other country in theworld. Restructuring and consolidation havedriven down costs and increased profits. Thenegative effect of this unfavorable situation,however, is that private consumption isweak. This, coupled with the structuralcrisis in the construction industry, continuesto hold back domestic demand.
Due to this weak domestic demand, lower-ing the unemployment rate which currentlystands at 11.2 percent will be a slow process.If we apply the rule of thumb that growthof over one percent is needed to createadditional jobs, then regular employmentwill increase only gradually.
Germany
Males
1960 Today
Females Males Females
France
66.9 72.4 75.6 81.3
66.9 73.6 76.7 83.8
Italy 67.2 72.3 77.8 83.7
Spain
Source: National statistics offices
67.4 72.2 77.7 84.0
Germany
1965 Today
Italy
2.5 1.4
2.7 1.3
France 2.8 1.9
Spain
Source: National statistics offices
2.9 1.2
6
Life Aims I I, 2005: Background information on the countries in the study.
Public finances are already stretched, andfurther belt-tightening is necessary ifGermany is to conform to the Maastrichtcriteria. Quite rightly, consolidating publicfinances is seen as an important goal of thenew government.
In the coming years it seems extremely likelythat the economic situation will improve.However, it is important to realize thatmiracles do not happen overnight; annualGDP growth of 1 to 2 percent seems realisticin the medium term.
France.Although the French economy has been onthe road to recovery since about mid-2003,this year’s real rise in GDP is only expectedto be a modest 1.5 percent or thereabouts.One of France’s main problems is highunemployment, which the de Villepingovernment has said will be uppermost onits agenda. The number of people in gainfulemployment has been stagnating for quitesome time now, and although the unemploy-ment rate recently fell below the 10 percentmark, thus appearing less ominous, thisseems to have been primarily due to changes
in labor market policy. Any improvement inemployment brought about by a healthiereconomy is likely to be gradual at best.
Public finances are another weak point. Lastyear the deficit ratio was 3.6 percent, andthis year and next year too it is forecast tobe above 3 percent. Thus France is unlikelyto be able to meet the Maastricht criteria
Economic growth in Germany, France and Italy has
been unsatisfactory in recent years, and as there is no
indication that this trend will be reversed. Receipts
from social insurance contributions will continue to
be to be insufficient, making reform of the social
security system even more inevitable. At the same
time, however, the disposable incomes of private
households will rise only marginally, so that as far as
their finances are concerned, many people will be
extremely limited. The positive exception to this trend
is Spain, which thanks to its balanced public budget is
enjoying not only a good economic situation but also
a healthy social security system.
Dr. Michael Heise,
Chief Economist of Allianz Group and
Dresdner Bank
In the next few years the new German government
needs to address the task of adapting the social
security system to the new demographic reality, so
it is good that the issue of increasing the state
pension age has already been raised. Together
with measures to boost growth by increasing the
productivity and employment rates, this will be
key in helping to lessen the burden on the social
security system.
However, these stabilization measures will not be
enough. In order to make the German social secu-
rity system future-proof, a far greater percentage
of old-age provision must be secured by capital
stock:
• As far as capital-secured pensions are concerned it
is not a question of introducing new products, but
far more one of making the existing products more
attractive, making it easier to access state aid and
thus making them accessible to everyone, what-
ever their income bracket.
• Capital-secured nursing care insurance should be
introduced gradually via a mixed model. Supple-
mentary private care insurance plans secured by
capital stock would allow a greater range of care
services to be provided and would also permit
social insurance contributions for nursing care to
remain at their current level.
• In health insurance, too, the financial situation
could be stabilized by moving certain blocks of
services from the sphere of pay-as-you-go
financed health insurance into a capital-covered
system. Examples of areas which could be
removed are dental treatment and dental prosthe-
ses, accidents which are not work-related and
sickness benefit.
What policymakers must not lose sight of whilst
discussing reform of the social security systems is
that we are running out of time, because due
to our demographic situation we only have some
15 years to build up the necessary capital stock.
7
and a balanced budget remains but a futuredream.
However, forecasts of economic growth arearound 2 percent for the next few years, andthus close to the average of the euro areamember countries.
Italy.In Italy as in Germany, the economy is grow-ing more slowly than the European average.The manufacturing industry in particular isin crisis. Italy’s traditional export productsare suffering from weak sales as the technol-ogy content of these goods is low and pricecompetition high.
The unemployment rate in Italy thus remainsrelatively high at 8 percent. Furthermore, as further structural change is expected inindustry, the number of gainfully employedpersons will tend to increase more graduallythan it has done so far.
The high level of public debt, which hassoared once more to some 108 percent ofGDP, will also continue to impede any gov-ernment attempts at implementing policieswhich 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 euroarea member countries.
Spain.The Spanish economy continues to enjoystrong economic growth significantly abovethe EU average. This is primarily driven byprivate demand, as rising wages and lowinterest rates create an advantageous climatefor consumption. At the same time, the con-struction industry is booming, with publicinvestment in infrastructure continuing toguarantee full order books.
However, despite a significant rise in thenumber of people gainfully employed, theunemployment rate remains relatively highat 11 percent, and the labor market situationis not set to improve in the next few years.
Unlike the other three countries, Spain hasmanaged to achieve a balanced public bud-get for several years now. The fiscal situationprovides the government with the freedomto pursue an active expenditure program aswell as to reform the social security system.
In the next few years, GDP growth shouldcontinue to remain strong at over 3 percent.
8
Our social security system is a financial obligation,
a form of debt, that is how economists see it. Their
calculation is simple: if the population continues to
age as the age pyramid indicates it will, economic
growth remains weak and social insurance expen-
diture remains at the same high level, debt will
rise further. According Standard & Poor’s and the
World Bank, by 2050, this debt could be 200 per-
cent of Gross Domestic Product (GDP). Such a
high level of debt would make German govern-
ment bond issues as good as worthless. The Ger-
man pensions authority should include this calcu-
lation in the letter it sends out to the population
about how much pension they will receive.
Andrew Bosomworth,
PIMCO portfolio manager
If German policymakers try to reduce the country’s
deficit by raising taxes and reducing expenditure
alone, without tackling the causes of the deficit by
reforming the labor market and reducing red tape,
they will be making a mistake. Until the employ-
ment problem is resolved, the deficit will continue
to expand. They need to reverse the order of
priority in which they do things by implementing
reforms first and accepting that these will lead to a
budget deficit. Once reform has taken place, the
growth which is needed to improve public
finances will come, just as it did in the United
States and Great Britain at the end of the 1980s.
Life Aims I I, 2005: Background information on the countries in the study.
1.3 Social security systems
and reforms.
The social security systems of all four coun-tries are pay-as-you-go systems, meaningthat the contributions of those currently paying social security contributions are usedto cover current expenditure on pensions,healthcare and nursing care.
In all four countries, people are providedwith a high standard of medical care and acomprehensive range of healthcare services.However, state healthcare systems will beconfronted with serious problems in thefuture. The demographic change of the nextfew decades, the continuing advances inmedical technology, rising prices for health-care services and the accompanying rises incontribution rates will soon threaten tooverload the state pay-as-you-go systems.
Where pensions are concerned, for yearspeople living in the four countries includedin the study could be sure that when theyretired they would receive a pension whichwould almost completely secure their stan-dard of living; on entering retirement theywould receive approximately 70 percent ormore of their final salary. Pension adjust-ment was usually in line with the develop-ment of wages, so everyone could see peoplearound them who were older than them-selves continuing to live well and share ineconomic progress.
As the countries are currently in differentstages of pension reform and have differentsocio-economic conditions, the awarenessof how necessary it is to make personalprovision for the future varies. In Spain inparticular, the fact that the economy iscurrently flourishing is tending to masklong-term problems. Since there is also littlediscussion on pensions in the political arenaat present, the population still has scantknowledge of the problem.
The different historical contexts also lead todifferent perceptions. In Italy, the socialsecurity system was traditionally more com-
prehensive than it was in Germany, so therewas correspondingly less need for peopleto get to grips with personal provision plans.The income threshold for state pensionsthere, for example, is a good 30 percenthigher than in Germany, meaning that thegroup of people with higher earning powerwho are above the threshold is muchsmaller. In Italy, self-employed people arealso covered by the state pension system,whereas in Germany the self-employed areresponsible for their own old-age provision.In addition, in Italy the transition periodsfor the reforms already passed are very long.It is thus perfectly conceivable that unlikepeople in Germany, most of the Italian popu-lation are not particularly aware of howmuch the reforms will effect their personalsituations.
Germany.The amount of money in the German socialsecurity purse is worrying. In addition to thedemographic shift, high unemployment andthe consequent reduction in the number ofgainfully employed persons obligated to paysocial insurance contributions are the maincauses of the difficult financial situation. Inorder to stabilize the situation, the Germangovernment has recently implemented twoquite substantial reforms.
As part of the pension reform of 2001, thepension formula was adjusted. The effectof this reform is a long-term reduction inthe average gross state pension level from48 percent today to 41 percent in 2030. Tocushion the effect, this adjustment wasaccompanied by the introduction of theRiester pension on January 1, 2002, whichprovides state subsidies depending on thenumber of family members and the marginaltax rate.
The demographic change in Germany, France,
Italy and Spain will affect the future stability of pay-
as-you-go social security systems, both healthcare
systems and pension systems.
9
10
As a result of the 2004 pension reform, theamount of tax charged on pensions is gradu-ally changing, and pensions will eventuallybe fully taxable by 2040. At the same time,subsidies for payments into pension planswere introduced. In order to further encour-age people to take out pensions secured bycapital stock, the basic pension (Basisrenteor Rürup Rente) was introduced. Contribu-tions to this are seen as special expenses andas such are tax deductible. This year themaximum amount which can be deductedfrom tax is 12,000 EUR, but the figure willrise to 20,000 EUR in 2025.
In Germany there are now numerous old-ageprovision products secured by capital stock.Traditional life insurance products havebeen joined by the Riester pension and thebasic pension, known as the Rürup pension,and there are also several ways of organizingpensions through companies. However, theamount invested in these products is stillsmall in comparison to the state pension.
France.In France as in Germany, the state pensionscheme is a compulsory pension schemefinanced by pay-as-you-go tax contributions.State pension payments are means testedand after 40 years of contributing themaximum amount someone can receive is50 percent of the income threshold forcontributions assessment. The minimumpension is currently 599.94 EUR a month,but is only paid to people over 65. Despitethis state pension age of 65, or 60 if theperson has paid contributions for 40 years,the actual average retirement age in 2002was 58.
France has two company pension schemes,ARRCO, which is open to all those inemployment, and AGIRC, which admitsonly those in managerial positions. Theamount of pension received is determinedby the level of contributions paid, whichis converted into points, and the schemes arefinanced by contributions from employeesand employers. In 2004, personal savingsplans for old age were introduced. Paymentsinto these plans are currently tax-free with agenerous upper limit.
Payments from the two schemes amount toapproximately 75 percent of the person’sfinal salary. In total, some 51 percent of theincome in a retired household is from astate pension, 34 percent is from a companypension and 15 percent from personal provi-sion. As reforms were implemented fairlyrecently, there are no reforms planned in theimmediate future.
Italy.The state pension system in Italy is also acompulsory pension scheme financed bypay-as-you-go tax contributions, with a statepension age of 65 for men and 60 forwomen. Anyone who has paid contributionsfor at least 20 years has the right to draw astate pension, although to receive a full pen-sion the person must have contributed for40 years. The amount of pension receiveddepends on how long the person has paidsocial insurance contributions for and whenthey began to make those payments. In thefuture, people who have been contributingsince January 1, 1996 or later will receivenot the minimum pension but what isknown as a “retirement allowance”. Cur-rently, the average household of retiredpersons receives 74 percent of its incomefrom a state pension, only 1 percent from acompany pension and 25 percent fromprivate savings.
In Italy, the second and third pillars arehardly developed at all. The reforms inrecent years, such as gradual raising of thestate pension age and the transition frompensions based on final salaries to pensionsbased on the amount of contributions paidare leading to a gradual decrease in theamount of state pension received. However,further reform is inevitable. One idea whichhas been on the table for several years nowis converting compulsory golden handshakes(Trattamento a Fine Rapporto) into a pensionproduct secured by capital stock. However,policymakers appear to be continuing tohold off implementing this.
Life Aims I I, 2005: Background information on the countries in the study.
Spain.In Spain, the state pension accounts for 92percent of retirement income, while bothcompany and private pensions are uncom-mon. The state pension age is 65 and theamount of pension received depends on thenumber of years for which the person hascontributed and the basis of assessment.This is calculated from the income liable tocontributions which the person receivedduring the 15 years directly prior to reachingstate pension age. Although it is also pos-sible to draw an early pension on reachingthe age of 60, if the person does not draw apension until they have reached the age of65 and after they have paid contributions forat least 35 years, they receive an extraallowance.
Despite indications that the population isaging, in Spain there is currently no debateon implementing reform. Relatively strongeconomic growth and a high level of immigration are currently concealing theproblems which demographic change willcause.
1.4 Media and public opinion.
The media influence people’s attitudes andopinions and are thus taking on a decisiverole in the development and continuation ofmodern democracies. A comprehensiverange of information from all media sourcesenables people from all walks of life toperceive the forces which are at work insociety.
Example – Germany.In Germany, a strong focus on the issue ofpensions both in political debate and inthe media has raised people’s awareness ofthe need to make personal provision forretirement. Between 2001 and 2004, forexample, there was extensive coverage inthe television news of the condition ofthe pension system in Germany. There havebeen times when more than half of whatwas reported about the condition of Ger-many’s social security system, particularlyon the television news, concerned thesystem for old-age provision. This has raisedawareness significantly and the effect haslasted. (Source: Media Tenor, September2005).
Dr. Moritz Kraemer,
Standard & Poor’s Director (Europe)
Aging populations inevitably lead to enormous
burdens on public budgets. Public expenditure in
Germany, for example, will have risen by over five
percent of Gross Domestic Product (GDP) by the
middle of the century.
If no sufficient measures are implemented to
change this course of events, for example reform-
ing social security systems and increasing the
employment rate, then public debt will spiral out
of control. Public debt in Germany will increase at
breakneck pace as of 2025, when demographic
pressure starts to become unbearable, and will
have rocketed to over 220 of GDP by 2050. There
is no avoiding the fact that such a development
will lead to concern about the country’s credit-
worthiness. Its credit ratings will go into free fall
and investors will demand higher risk premiums,
causing the budgetary black hole to implode yet
further.
The ideal time for stemming the tide has already
passed. Thus, in addition to bold reforms of the
healthcare and pension systems and policies
which inject vitality into the labor market, swift
consolidation of public finances is paramount.
Surpluses must be created as quickly as possible
in order to provide enough financial flexibility to
prevent the country’s economy collapsing.
2010 2015 2020 2025 2030 20352005
Germany France UK USA
Hypothetical Sovereign Ratings
(based on general government balance performance).
AAA
AA+
AA
AA–
A+
A
A–
BBB+
BBB
BBB–
Assuming no change in
current government fiscal
policies. Standard & Poor’s
takes a large number of
factors into consideration
when deriving sovereign
credit ratings. In the very
long-term, prolong fiscal
imbalances tend to become
a dominant factor.
11
12
Media influence on public opinion.
Strong focus on pensions raises awareness
of need for provision.
Example – 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).
2001 2002 2003 2004 2005
4 years ago Today80%
60%
40%
20%
0%
% of media coverage on pensions
Worry: Pensions
35%
30%
25%
20%
15%
10%
5%
0%
Source: Media Tenor /Institute for Election Research,
Politbarometer
13
Life Aims I I, 2005: Results – Comparison of countries.
What life aims do people in these countriesreally want to achieve? Who is most satisfiedwith life? And who is financially better pre-pared for the future and old age?
2.1 Life aims: savoir vivre or
good qualifications?
For 80 percent of French people surveyed,“Enjoying life right now” is an important lifeaim, coming in only slightly behind the aimof “Having my own children”. Thus it isprobably no coincidence that France’s birthrate of 1.9 children per woman is higherthan those of the other three countries andthe demographic time bomb is not tickingso loudly here.
In Germany and Italy, by contrast, “Havinga good education” is the life aim mentionedmost often. In Spain, this aim is onlynarrowly beaten into first place by the aimof “Living healthily”. The economic situationand job security seem to be the mainconcern in these three countries, so it is notsurprising that their enjoyment of life isdependent on more tangible life aims suchas owning their own home or livinghealthily.
Although achieving “Financial security forthe future and old age” ranks third amongthe life aims of people in Germany and thusappears to be a greater concern there thanin the other three countries, it is actuallydeemed to be an important life aim by thesame percentage of people living in Spain(78 percent, fifth place) and by even morepeople living in Italy (86 percent, fourthplace). In France, too, a substantial 73 per-cent of people believe that financial securityis important, putting it in fourth place.
In all four countries, financial securityranks first when it comes to the differencebetween the importance of a life aim and
2 Results – Comparison of
countries.
Our perceptions of countries are cliché-ridden.
We say the French and the Southern Europeans know
how to enjoy life, while the Germans are more
concerned with the serious things in life. But what are
people in these countries really like?
the extent to which it has been achieved.Here, there is by far the greatest discrepancyin all four countries.
Life aims.
Having a good education/training.
Living healthily.
Financial security for the future/old age.
Question 3: Now I’d
like to mention several
possible personal life
aims. Please tell me how
important these are to
you.
Question 3a: And to
what extent would you
say you have been able
to achieve this aim so
far?
Germany: 88%
France: 73%
Italy: 88%
Spain: 88%
Germany: 66%
France: 45%
Italy: 43%
Spain: 46%
Germany: 80%
Germany: 72%
France: 74%
France: 60%
Italy: 77%
Italy: 68%
Spain: 73%
Spain: 68%
Germany: 78%
Germany: 34%
France: 73%
France: 32%
Italy: 86%
Italy: 26%
Spain: 78%
Spain: 32%
14
Having my own children.
Enjoying life right now.
All respondents (N = approx. 1,000 each country).
Top 2 boxes
2.2 Satisfaction with life:
Spaniards lead the field.
Life aims and, more specifically, theirachievement are closely related to satisfac-tion with life. The extent to which a lifeaim affects satisfaction, however, dependson the type of aim it is.
There are some life aims which are, formany people, a matter of course, for exam-ple being in a long-term relationship orhaving children. Although achieving theseaims increases satisfaction with life onlymarginally, not achieving them leads to dis-satisfaction.
The opposite is true of the life aims “Finan-cial security for the future and old age”,“Enjoying life right now” and “Career devel-opment”. Achieving these aims has a positiveinfluence on satisfaction.
People living in Spain are more content withlife than those living in the other threecountries, and more of them report animprovement in their satisfaction in the pastfive years.
Satisfaction with life.
Question 1: If you take a look at your life so
far, how satisfied are you in general with your
life?
Question 1a: As you see it, has your satis-
faction with life changed as a whole over the
last five years?
All respondents (N = approx. 1,000 each country).
Top 2 boxes
People in France are the least satisfied withlife. Together with the Germans, theyoccupy last place when it comes to havingseen an improvement in their personalsituation in the last five years. However,Germans take second place when it comesto satisfaction with life so far, just slightlyahead of Italians.
In all four countries, the most importantsource of satisfaction with life is family andfriends, while what makes people most dis-satisfied are political and economic condi-tions and financial security for the futureand old age. The overall result concerningdissatisfaction mirrors that of satisfactionwith these areas of life: the populations ofSpain and Germany are more satisfied withtheir friends and family than those in Italyand France, and they are not as dissatisfiedwith their financial security.
Germany: 75%
Germany: 53%
France: 54%
France: 35%
Italy: 77%
Italy: 42%
Spain: 74%
Spain: 50%
Germany: 52%
France: 42%
Italy: 49%
Spain: 56%
Germany: 32%
France: 32%
Italy: 44%
Spain: 47%
Germany: 75%
Germany: 63%
France: 81%
France: 55%
Italy: 81%
Italy: 59%
Spain: 78%
Spain: 61%
Different countries – different recipes for success?
Observations by Dr. Dennis J. Snower,
President of the Kiel Institute for World Economics
Life Aims I I, 2005: Interview.
15
security in planning and do not requirefurther adjustment five years later on. Thesustainable pension reforms initiated in Italyin 1992 and 1995, which will not be fullycomplete for another 30 years, are an exam-ple of how such security in planning can beprovided. Nevertheless, such long timescalescan result in the sense of urgency beingforgotten.
How can people themselves prepare for these
demographic changes?
First of all, they need to realize that in thefuture they will need to take on muchmore responsibility for their social welfarethan they do now, be it regarding old-ageprovision, healthcare or education. Theywill have to pay out of their own pockets formany of the things which are currentlyfinanced completely or primarily by thestate. This means that many of those in lowincome brackets will have to change theirspending habits and the way in which theyprovide for their financial futures. Increas-ingly, the consumption desires of today willcollide with the financial provision goals oftomorrow.
What role do financial service providers play in
this process?
The privatization of benefits once providedby the state demands more effort from peopleto provide for themselves. Financial serviceproviders can help them to do this. Whilethey may not be able to take over the role ofthe state, they are able to provide peoplewith the financial tools they need to adjustto the new reality. This means that productranges must be adapted to meet these newrequirements. In addition to long-term sav-ings plans for old age, for example, FSPs willhave to offer products which address people’sfinancial needs during periods of educationor training, as well as supplementary healthinsurance schemes. The insurance industryneeds to offer simple, cost-effective productsfor personal provision which enable all citi-zens to secure their own financial futures,even if they are in a low income bracket.
Mr. Snower, the countries where Allianz con-
ducted its survey have very diverse social secu-
rity systems. In your opinion, which country is
best prepared for the demographic change?
That is difficult to say. If you look at thepension systems, then Germany and Italy arecurrently in the best position to solve demo-graphic problems. Spain has yet to introducesustainable reform and France is alsostruggling to do so. The demographic changewill effect healthcare systems in a similarway, yet here all four countries are muchless prepared, hardly any of the necessarygroundwork has been done.
What causes the greatest difficulty in
implementing reforms?
The social security systems are all financedby contributions, which worked well wheneconomies were flourishing and populationswere growing. However, things havechanged since then; we now have weakeconomic growth and aging populations, andthe social security systems are being pushedto their limits. State benefits which wereonce simply the norm need to be reducedand replaced through private initiatives.Politicians, however, find it difficult torenege on their election promises and toreduce benefits, which is why reforms areintroduced slowly, late, or half-heartedly.And the fact that the electorate is skepticalabout these essential reforms makes theprocess even harder.
If there is no way of avoiding reform, then how
should reforms be introduced?
Most importantly, politicians need to becompletely upfront with the electorate andto explain the changes needed to addressthe demographic problem as clearly as theypossibly can. Chopping and changing as wehave with the various pension reforms intro-duced in Germany in the past ten years onlyserves to destroy the confidence of theelectorate completely. Reforms should bedesigned in such a way that they provide
Satisfaction with areas of life.
Your family, your friends and acquaintances.
Your health care.
Your time for leisure and hobbies.
Your financial provision for the future/old age.
Economic conditions.
Political environment.
All respondents (N = approx. 1,000 each country).
Top 2 boxes
2.3 Long-term financial planning
and personal provision.
People in all the countries in the studybelieve that long-term financial planning isimportant, but those in Germany accord itjust a little more importance. None of thefour countries are role models when itcomes to personal provision, unlike Switzer-land and the Netherlands which succeededin making pensions secured by capital stocka mainstay of their social security systemsearly on (see Table 4). In Germany, however,several years of debate in politics and themedia about the Riester pension and the likehave not been completely without effect.
Table 4: Division of retirement income:
Proportion of pension income received from
state pay-as-you-go systems and from
pensions secured by capital stock in Switzerland
and the Netherlands
No less than a third of the German popula-tion believe that however long they live theycan look forward to a financially secureold age. In France, only 17 percent of peoplebelieve that. Furthermore, a significantlyhigher proportion of people living in Ger-many, 35 percent, are satisfied with theirpersonal provision than their counterparts inItaly (16 percent), France (22 percent) andSpain (24 percent).
By contrast, people in Spain are most opti-mistic concerning their personal provision.39 percent of those who have not yetachieved their aim of providing for thefuture and old age believe that they will stillbe able to, while in Germany only 25 per-cent of people believe this (see Table 5).
However, the sobering reality is that in allfour countries, personal provision is in itsinfancy and the majority of respondents seeno reason for satisfaction or optimism.
Switzerland
State pay-as-you-
go system
Pensions secured
by capital stock
Netherlands
42 % 58 %
50 % 50 %
Germany 85 % 15 %
Source: Brugiavini, Aging and Saving in Europe, 2002
Germany: 72%
France: 68%
Italy: 67%
Spain: 79%
Germany: 45%
France: 52%
Italy: 27%
Spain: 47%
Germany: 45%
France: 40%
Italy: 33%
Spain: 41%
Germany: 28%
France: 27%
Italy: 20%
Spain: 28%
Germany: 15%
France: 2%
Italy: 18%
Spain: 22%
Germany: 15%
France: 2%
Germany: 3%
France: 2%
Italy: 4%
Spain: 13%
Germany: 3%
France: 2%
taly: 4%
Spain: 13%
Question 2: Now I’m
going to list some aspects
of your life. Would you
please tell me how satis-
fied you are actually in
each instance?
16
17
Life Aims I I, 2005: Results – Comparison of countries.
Table 5: Issues concerning longevity –
Comparison of countries.
Considering that demographic change isinevitable and the amount of capital cover-age in social security systems insufficient, itis obvious that providing benefits willbecome hugely expensive for governmentsif there is further hesitation on the subjectof reform. As the first Allianz Life Aims studyconducted in Germany in 2004 showed,people significantly underestimate theextent of personal provision necessary.
Although people are now aware of the factthat personal provision is important, they arestill not acting on this knowledge. One rea-son is that many of them simply do not havethe financial means to invest in personalprovision, and another the fact that neitherpolitical reforms of the systems nor theproducts themselves are transparent enough.
In terms of where their priorities lie, how-ever, people are often more concerned withconsumption rather than personal provision.63 percent of people in Germany alreadyforgo some current consumption to providefor the future, and a further 27 percentwould be willing to do so, whereas those inFrance, Italy and Spain are considerablymore reticent.
Willingness to forgo some current consumption.
Question 26: Have you already given up some
things in order to make personal provision for
you future/your old age?
Group: Persons not yet retired
Germany
Long-term financial planning is
(very) important.1
France
62%
49%
Italy 54%
Spain 54%
Germany
I’m (very) convinced that I will still be able
to achieve my personal provision aim.2
France
25 %
23 %
Italy 24 %
Spain 39 %
Germany
However long I live, I have made (very)
good provision.3
France
33 %
17 %
Italy 20 %
Spain 26 %
Germany
I am very satisfied with my current personal
provision arrangements.4
France
35 %
22 %
Italy 16 %
Spain
All respondents (N = approx. 1,000 per country).
Top 2 boxes
1 Question 6b: In your opinion, is long-term financial
planning important for you to achieve your life aims?
2 Question 6: And if you think about the future, how con-
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?
24 % Germany: 63%
France: 36%
Italy: 32%
Spain: 30%
Yes
18
2.4 Expectations of financial
service providers.
People need to feel that they can trust some-one before they will talk to them abouttheir finances, and this is reflected in whatthey want from a financial service provider.Above all, customers want an advisor whothey know well, with whom they can form along-term relationship, who knows their per-sonal situation, and above all, who is willingto listen carefully to them. It is extremelyimportant that the products available aretransparent, but whether or not the advisoralso sells products from other providers orhas the possibility of consulting furtherexperts it is less important. In brief, the mes-sage is clear: Less complexity, more trans-parency and greater customer orientation!In all four countries, people still associatefinancial planning with banks far more thanwith insurance companies, and the expecta-tions of a banking advisor are still slightlyhigher than those of his colleagues in insur-ance. However, this difference can be as little as one or two percentage points.
Factors which influence satisfaction –advice from a bank.
Bank advisor/Insurance advisor listens carefully
to me.
Products are transparent.
I know bank advisor well.
We have been working together for a long time.
Bank advisor/Insurance advisor knows my
personal situation.
Bank advisor/Insurance advisor also advises on
products from other providers.
Bank advisor/Insurance advisor has access to
further experts.
All respondents (N = approx. 1,000 each country). Top 2
boxes. Results for countries as deviations from average
Germany: 65%
Germany: 64%
France: 54%
France: 53%
Italy: 70%
Italy: 67%
Spain: 63%
Spain: 57%
Germany: 75%
France: 56%
Italy: 63%
Spain: 55%
Germany: 76%
France: 60%
Italy: 65%
Spain: 62%
Germany: 55%
Germany: 50%
France: 53%
France: 44%
Italy: 47%
Italy: 40%
Spain: 42%
Spain: 37%
Germany: 52%
Germany: 51%
France: 28%
France: 28%
Italy: 40%
Italy: 39%
Spain: 39%
Spain: 45%
Germany: 52%
Germany: 50%
France: 29%
France: 29%
Italy: 42%
Italy: 40%
Spain: 36%
Spain: 34%
Germany: 63%
Germany: 60%
France: 51%
France: 46%
Italy: 58%
Italy: 56%
Spain: 48%
Spain: 40%
Germany: 68%
Germany: 60%
France: 51%
France: 45%
Italy: 51%
Italy: 47%
Spain: 44%
Spain: 42%
Question 14: When think-
ing about professional
providers such as banks
or insurance companies,
what does your satis-
faction depend on when
you receive advice from
a(n) bank advisor/insur-
ance advisor? Which
aspects are most impor-
tant to you when given
advice?
bank
insurance
19
Life Aims I I, 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.
Four years after the introduction of theRiester pension secured by capital stock onJanuary 1, 2002, and after intensive debatein politics and the media, the question is towhat extent the population of Germany haschanged its attitudes to personal provisionand whether or not this change has led tochanges in behavior.
3.1 Life aims: Good education
most frequently cited life aim.
The developments in the labor market areleaving their mark, as 88 percent of Germanssay that “Good qualifications” are their key
3 Results – The situation in
Germany.
In the last two decades, a combination of several
factors has served to significantly change the socio-
economic landscape in Germany, not least German
reunification, which positioned the country in the
middle of an expanding European Union. Many people
are also now worried about the economy and about
the security of their jobs, so even demographic change
and its far-reaching consequences sometimes fade
into the background. Yet it is precisely Germany which
will be particularly affected, since its state pension
scheme is 85 percent funded by current contributions.
20
Burkhard Wilke, Executive and
Scientific Director of the German
Central Institute for Social Issues
When asked to rank twelve different life aims in
order of importance, people in Germany put civic
engagement last! How can that be reconciled with
the belief that Germany is the birthplace of the
concept that it’s “good to belong” to a club or
association and that the Germans donate more to
charity than any other nationality? Well, the second
of these beliefs is most definitely a myth: although
in absolute terms the Germans do give a lot to
charity, in terms of pro-capita giving they are at the
mid to low end of the scale when compared with
other industrialized countries. Moreover, according
to a recent GfK survey, the entirety of all charitable
donations can be attributed to just 28 percent of
the German population. And although it is true
that there is a wealth of clubs and associations in
Germany, some 600,000 officially registered and
several hundred thousand more not registered,
many of these principally exist to serve the leisure
interests of their members. Thus people who
belong to them would hardly see their member-
ship as civil engagement.
Yet perhaps we should look at this response in a
different light: 30 percent of people living in Ger-
many say that civil engagement ranks among their
most important life aims, and 28 percent donate
money to charity. That is a start, at least. Anyone
responsible for a business, a department or an
association knows the rule of thumb: a third of
those involved works actively toward and consid-
ers the common good, a further third jogs along,
and the remaining third has to be more or less
carried by the others. This is actually confirmed by
the most recent survey of voluntary workers
commissioned by the German Ministry for Family
Affairs: in 2004, 36 percent of the population had
been working in some kind of voluntary capacity
for over 14 years, 34 percent were working in a
voluntary capacity at that moment and 30 percent
were not interested in voluntary work. However,
the survey did provide a glimmer of hope, since
hidden amongst the 34 percent of people who are
“co-joggers” are 12 percent who are willing to
remain involved in a voluntary capacity in the long
term.
Our society needs to work hard to mobilize these
silent reserves. The voluntary sector needs to pro-
mote itself as being transparent and willing to
develop, policymakers should remove the red tape
which hinders the voluntary sector, and companies
should not only encourage people to do their bit
for society, but also act as role models. After all, is
it really necessary for every single corporate social
responsibility (CSR) measure to come with a tag
attached detailing how it benefits the company? To
paraphrase John F. Kennedy: Ask not what society
can do for you – ask what you can do for your
society.
Life Aims I I, 2005: Results – The situation in Germany.
life aim. They rank them well above “Beingin a long-term relationship” (80 percent) and“Financial security for the future and oldage” (78 percent). However, their main con-cern seems to be securing a job rather thanhaving a good career, as only 65 percentbelieve that “Career development” is animportant life aim.
There was also an increased awareness ofthe necessity for personal provision, with94 percent of Germans assuming that theythemselves will have to take on responsibil-ity for providing for their futures. Only10 percent consider themselves to be well-informed about political reforms, and only6 percent believe that the reforms of thestate social-security system will leave themadequately provided for in the future.
Thus the aim of “Financial security for thefuture and old age” advanced to third placein the list of Germany’s most important lifeaims with a score of 78 percent. What ismore, since only 34 percent of respondentshave achieved this goal, it is here that thereis by far the greatest discrepancy betweenthe importance of a life aim and its achieve-ment. Only 28 percent of Germans are satis-fied with their financial security, which theyconsider to be a major prerequisite for theachievement of many other life aims such asowning their own homes (79 percent), asecure future and old age (71 percent),discovering the world (71 percent), havinga good education (52 percent) and havingchildren (50 percent).
Importance and achievement of life aims.
All respondents (N = approx. 1,000 each country).
Top 2 boxes
Question 3: Now l’d like to mention several possible
personal life aims. Please tell me how important these
are to you.
Question 3a: And to what extent would you say you
have been able to achieve this aim so far?
Dr. Michael Eilfort,
Managing Director of “Stiftung
Marktwirtschaft”, a market-oriented
economic-policy think tank
“Our pensions are secure” – anyone who still
believes this today probably still believes in Santa
Claus. Faced with massive demographic change,
our social security systems are in no way future-
proof. Not only are the experts aware of this, but
increasingly also the general public.
Anyone who wants to maintain an adequate stan-
dard of living in their old age simply must take out
a personal pension. Yet in Germany there is still a
huge gap between what people know they need to
do and what that actually do. In reality, extremely
few people are making enough personal provision.
The reason for this is that in this country of wealth
redistribution, the state is far too involved in
welfare. If we want people to take on more
responsibility for their own welfare, we must give
them the chance to do this and also allow them to
retain more of their income so that they are in a
position to do it. Since the social security purse is
empty, the only way to do this is for the state to
become less involved in welfare and focus on its
real tasks. That will lead not to a loss in terms of
welfare, but rather to an opportunity to make the
system more dynamic, as well as vastly increasing
freedom.
21
Having a good education/
training
Being in a long-term relationship
Financial security for the future/
old age
Individuality and the ability to
make my own decisions
Having my own children
Enjoying life right now
Living healthily
Career development
Having enough opportunity for leisure
activity and personal hobbies
Owning my own home
Discovering the world – travel abroad
Civic engagement
88%
72%
80%
84%
78%
40%
75%
65%
75%
80%
73%
56%
70%
50%
65%
51%
62%
55%
60%
73%
38%
46%
30%
72%
Well achieved
28%
16%
60%
35%
20%
44%
50%
49%
45%
27%
54%
28%
Poorly achieved
Extent to which achieving the aimsdepends on financial conditions.
All respondents (N = approx. 1,000 each country).
Top 2 boxes
Question 5: You just listed several important aims in your
life. To what degree would you say is the achievement
of these aims also dependent on financial conditions?
Dr. Eugen Buß,
University of Stuttgart-Hohenheim
Germany is in a state of flux: their has been so
much change in societal values in so many areas
that this has led to the formation of completely
new social benchmarks. Trust in state institutions
continues to dwindle and the disparity between
people’s perfectly rational arguments concerning
provision and the opinions of experts is growing.
Health and financial security have become the pri-
mary concerns of people in Germany. They want
to keep what they already have, but expand it just
a little and make it just a little more comfortable,
just a little more select. They value continuity, clar-
ity and security, the more the better. Thus there
is no question of people here suddenly having
lowered their expectations. At the same time,
however, we are seeing a fundamental transition
from a society which prioritized long-term goals to
one which favors short-term ones; people in this
country are now much more concerned with living
in the moment.
As we pass through this period of changing societal
values unique to Germany, however, another new
reality finally becomes clear. We can no longer
depend on the same level of state provision that
people enjoyed in the past, indeed there is an
ever-widening chasm between demands on the
welfare state and the probability of those demands
being met. As a result, people are becoming less
satisfied with life. They value financial security, but
because in the past there was never any need to
make personal provision for one’s own future,
they are unfamiliar with the idea. Here too, there
is an odd ambivalence, on the one hand people
want financial security at all stages of their lives,
but on the other they feel no obligation to take on
any responsibility for achieving this.
Conclusion: The current value profile for people
living in Germany means that financial service
experts must completely redefine their roles. They
must be able to manage a barrage of new value
coordinates such as a) a general loss of trust, b)
prejudices against expert opinion, c) the new
importance accorded to networks based on mutual
benefit, d) the new German “coffee house”
mentality, and e) people’s increasingly emotional
approach to financial services.
The majority of the German population (80 percent) believe that they are personallyresponsible for achieving these aims. How-ever, more people there than in France, Italyand Spain also believe that the economy (39 percent) and policymakers and the state(28 percent) have a certain influence on theachievement of these aims.
People in Germany are more critical whenit comes to the development of socio-eco-nomic conditions which make it possibleto achieve important life aims. 27 percentof people there believe that these condi-tions have improved, but just as many saythat they have deteriorated, which is thesecond most negative figure of all fourcountries. Only in Italy was it slightly higher,at 28 percent.
The Germans are also less optimistic. Only25 percent of those who have not yetachieved their aim of financial securitybelieve that they will still be able to do so.
22
Owning my own house
Financial security for the
future and old age
Discovering the world –
traveling abroad
Having a good education
Having my own children
Enjoying life right now
Career development
Living healthily
Having enough opportunity
for leisure activity and personal
hobbies
Individuality and the ability to
make my own decisions
Being in long-term relationship
Civic engagement
79%
71%
69%
52%
50%
49%
45%
44%
42%
41%
36%
27%
Life Aims I I, 2005: Results – The situation in Germany.
3.2 Satisfaction with life: Satis-
faction depends on achieving life
aims.
A higher percentage of people living inGermany are satisfied with life (52 percent)than are very dissatisfied (only 8 percent);32 percent are more satisfied than they werefive years ago, while 21 percent are less sat-isfied. However, satisfaction with life is to agreat extent contingent on the achievementof personal life aims.
Analysis of the replies revealed that thereare some life aims whose achievement is, ifanything, regarded as a matter of course.Although achieving these aims increasespeople’s satisfaction with life only marginally,not achieving them leads to dissatisfaction.Aims of this type are having a good educa-tion, being in a long-term relationship andhaving children. The opposite is true of thefollowing life aims: financial security for thefuture and old age, the ability to make one’sown decisions, enjoying life right now andcareer development. Achieving these aimshas a positive influence on satisfaction.
The majority of people in Germany are onlyvery content with their family and friends(72 percent). In joint second place, with 45percent each, come health provision andhaving enough opportunity for leisure activ-ity and personal hobbies. By contrast, only28 percent of the population are satisfied
Dr. Markus Rieß,
Spokesman for the Management Board
of Deutscher Investment Trust (dit)
Personal provision is more important today than
ever. Everyone has different objectives and differ-
ent expectations of the risk and return of their
investment, and as the socio-economic climate in
which people plan their lives and finances
changes, they demand more and more flexibility
from their investment. Although investment
funds offer this flexibility and offer broadly-based
portfolios which allow investors to share in the
development of different investment categories
and regions, the proportion of people in Germany
who use them as tools for financial planning is
relatively small. Personal provision plans must take
various factors into account, which is why compre-
hensive, product-independent advice is essential.
A balanced securities portfolio is one that spreads
its assets widely, which means investing in pension
products as well as shares. The latter offer the
potential to develop value significantly, particularly
in the longer term.
with their financial security for the futureand old age. It is in this category that wesee the biggest discrepancy in the surveybetween the three factors: 78 percent ofpeople say that the life aim is important, butonly 34 percent have achieved the aim andonly 28 percent are satisfied with this areaof their lives.
Table 6: Correlation in Germany between actual
financial planning and satisfaction with current
long-term financial plans.
23
I invest at least 10 % of my net income in
personal provision.
I save money through a supplementary health
insurance/supplementary nursing insurance
scheme in case of unexpected illness.
... with my current long-term financial plans.
(Very) satisfied
57 %
51 %
(Very) dissatisfied
14 %
20 %
I have arranged for long-term personal
provision with a financial expert (from
banking, insurance).
55 % 15 %
I know exactly how much money I will have
available when I reach retirement age.
43 % 23 %
Correlation.
All respondents (N = 1,003). Top 2 box and Bottom 3 box
Question 10.1: “How
satisfied are you with
your current long-term
financial plans?”
Question 7: “I would like
to read you a few state-
ments about long-term
financial planning. Can
you tell me which of
these are true for you?”
This impression is confirmed by correlatingthe replies given by individual respondents.Those who said they invest at least 10% oftheir net income in personal provision orwho have drawn up a personal provisionplan with a financial expert are significantlymore often more satisfied (see Table 6).
Worries about old age.
All respondents (N = approx. 1,000 each country).
Top 2 boxes
Question 28: When you think about your future, what
causes you to be most concerned with respect to old age?
In the search for reasons why there is such agreat discrepancy between how importantpeople believe the aim of financial security isand the extent to which this aim has actuallybeen achieved, the survey provides Allianzwith a few answers. A person living inGermany who had an average gross monthly
24
income of 2,500 EUR would have to save165 EUR a month over a period of 25 yearsat an average interest rate of 4 percent tomaintain an average standard of living in oldage. The calculation assumes that thisincome from personal will be in addition tothe state pension, but does not take intoaccount the potential cost of long-termnursing. However, low incomes restrict thefinancial latitude which people need tomake personal provision, especially if theyare young, starting a family or over 50. Onlyaround 30 percent of respondents pay morethan 250 EUR into a personal provisionplan, while just under 20 percent set asidenothing at all. Particularly alarming is thefact that only 25 percent of those who havenot yet achieved their personal-provisiongoals believe they will still be able toachieve them. This is despite the fact that asignificant majority (over 80 percent) of theGerman population is prepared to hold backon consumer spending in favor of personalprovision. Indeed people in Germany are farmore willing to do this than people in anyof the other three countries.
“It’s normal to feel worried about yourfinancial security until you actually getolder, and then you either stop worrying, oryou’re so worried about other things thatit doesn’t seem so bad” is a statement oftenheard from today’s under-40s. Yet given thedemographic time bomb, this is an attitudethat people cannot afford to have.
Dr. Maximilian Zimmerer,
CFO of Allianz Lebensversicherungs-AG
Life expectancy is continually increasing. Com-
bined with other factors, this is pushing our social
security systems to their limits. Many people in
Europe have thus already realized that their state
pension will not be sufficient and that they must
all find a second source of income to ensure an
adequate standard of living in old age. This is the
core competence of life insurance companies, the
only companies that guarantee their customers
lifelong income through a pension scheme. That is
exactly the kind of security people need in their
old age. In addition to providing for their old age,
however, anyone in gainful employment should
think about insuring themselves against occupa-
tional disability. This is not only an issue for those
working in dangerous occupations, since every
second locksmith or painter, every third IT special-
ist and every sixth tax consultant becomes unable
to work in their chosen profession. If this happens,
the state then pays them what is known as general
disability benefit, but only in the worst case, that
is if the person concerned can work less than three
hours a day, and the benefit is only around 31
percent of their gross final salary. Consequently,
private insurance is crucial.
General economic development
in Germany
Health
Environment pollution/
climate change
Change in societal values,
social coldness
Financial provision for family
members and children
Limited mobility
Loneliness
Own financial security
War/terrorist attacks
Accommodation/level of rents
49%
48%
44%
42%
39%
34%
32%
32%
28%
22%
Life Aims I I, 2005: Results – The situation in Germany.
3.3 Long-term financial planning
and personal provision: In their
infancy.
62 percent of the German population nowbelieve that long-term financial planning isextremely important, yet only 28 percentare satisfied with this area of their lives.
Although 50 percent of people living inGermany have at least had the amount ofpension they can expect to receive in retire-ment worked out, according to the Allianzsurvey only 31 percent know exactly howmuch money they will have at their disposal.The reason why people are relatively wellinformed is because one year ago the Ger-man pensions authority began to send everyperson a letter which tells them the amountof state pension they can expect to receiveaccording to current calculations. However,these figures should be treated with care, asthey are based on the assumption that theperson will be in continuous employmentuntil they are 65. Moreover, the plannedpension adjustments of 1.5 and 2.5 percentare too optimistic given the forecast develop-ments in wages and purchasing power.
Only 39 percent of people living in Germanyhave so far drawn up a long-term personalprovision plan with the help of a financialservices specialist, and only 37 percent ofthem invest at least 10 percent of their netincome in personal provision.
By contrast, 27 percent of people say thatthey have not yet made sufficient provisionfor their future, but are at least aware thatthey have to do something. 25 percent haveno extra income to invest in personal provi-sion, while only a fortunate 20 percent needgive the subject no thought because theyhave already made good provision for thefuture.
If they were asked today to pick a product toaddress their personal provision needs,although 66 percent of people living in Ger-many would choose savings accounts andsavings plans, 62 percent would also chooselife insurance and 59 percent a personal pen-sion plan. Joining these as favorites are pro-fessional disability insurance (61 percent),company pension plans (57 percent), supple-mentary nursing care insurance (55 percent)and private health insurance (47 percent).54 percent would select a building loanagreement, 43 percent would choose aninvestment fund, while 28 percent wouldinvest in the stock market themselves. Asregards the Riester pension, which brings upthe rear with a score of only 24 percent, itis quite clear that more work has to be doneto build up confidence and explain how theproduct works.
In terms of their knowledge of and willing-ness to invest in personal provision products,people in Germany are once again ahead ofthose in France, Italy and Spain, since their“Yes” scores are above average for all theproducts mentioned in the survey.
Dr. Ursula Engelen-Kefer,
Deputy Chairperson of the Federation
of German Trade Unions
The main problems dogging social security systems
are the ongoing erosion of the number of em-
ployed persons obligated to pay social insurance,
the fact that it is now normal for people to go
through periods of where they do not work, and
the rising numbers of long-term unemployed. The
very foundation of the social security system has
developed cracks, not because of demographic
development, but because the advent of a more
flexible labor market has changed the employment
structure.
For this reason it is necessary to expand the state
social security systems according to the principle
of citizens insurance (Bürgerversicherung). The
prerequisite for this is a socially fair reform of taxes
and contributions which would reduce the burden
on social security systems. Introducing a tax-
financed allowance for social security contributions
would promote socially-secure employment. There
is also no doubt that a greater degree of personal
provision is needed; we believe that the best way
of facilitating this is by expanding company pen-
sion schemes. However, one thing is clear: we will
only be able to rise to the challenges of the future
if our economy adjusts to demographic develop-
ments through a long-term policy of ensuring
sufficient professional training and organizing
work so that it is open to people of all ages.
25
transparent (65 and 64 percent respectively),the person knows the advisor well (63 and60 percent) and whether the advisor is famil-iar with the customer’s personal situation(55 and 50 percent). Only then does it mat-ter if the advisor can provide access to otherexperts (52 and 50 percent) or sells productsfrom other providers (52 and 51 percent).
Summary.
Over the past five years, there has been littleimprovement in how satisfied people livingin Germany are with their lives. Yet a good50 percent of them are satisfied. Having agood education was the life aim mentionedmost often. Although financial security forthe future and old age was also seen as beingan important life aim, only a few peoplehave managed to achieve this aim so far. Yetprecisely this life aim has a high influenceon satisfaction.
Most people living in Germany believe thatlong-term financial planning is important,but most of them do not plan or makeprovision for the future: one third of thepopulation thus is or will be totally depen-dent on the state pension. Another thingwhich people worry about is the politicaland economic climate.
3.4 Expectations of financial
service providers:
Trust rather than competence?
Trust and competence!
When asked who they trust to advise themon long-term financial planning, people liv-ing in Germany said that they seek the adviceof their long-term partners (51 percent) and families (47 percent) before consulting a personal banking or insurance specialist(37 percent). However, when these repliesare compared with the data on how satisfiedpeople actually are with their financial plan-ning, the professional advisers are ahead ofthe field.
It seems to be no coincidence that peoplerate the competence of their long-termpartners and families higher than that of theprofessionals, as their expectations concern-ing this competence are based on factorswhich professional advisors have evidentlyneglected until now.
Satisfaction with advice from a banking orinsurance advisor is dependent on whetherthe advisor listens attentively (banking: 76 percent, insurance: 75 percent), the rela-tionship is long-term (68 and 60 percentrespectively), the product being offered is
26
Personal environment
Partner/spouse
Family
Friends/colleagues
Bank
My personal bank advisor
My bank
Insurance
My personal insurance
advisor
My insurance company
Miscellaneous
My own research
(e.g. media reports)
Consumer bureaus
Independent financial advisors/
brokers
51%
47%
22%
36%
35%
37%
34%
35%
25%
15%
Rating of professional competence Influence on satisfaction with financial planningSa
tisf
acti
on
wit
h c
urr
ent
lon
g-te
rm f
inan
cial
pla
nn
ing
Satisfaction with professional competence on financial matters.
All respondents (N = approx. 1,000 each country).
Top 2 boxes
Question 13: And from your point of view how would
you rate the professional competence in each instance?
All interviewees (N = approx. 1,000 each country).
Correlation with Question 13
Question 10.1: How satisfied are you with your current
long-term financial planning?
27
Life Aims I I, 2005: Results – Specific target groups in Germany.
Interestingly, however, the different demo-graphic groups sometimes deviate fromthis rule. For example, young adults are thesecond most satisfied group, although theyhave the lowest income and the lowest levelof personal provision. Young families, too,despite having a high level of financialcommitment and little disposable income,and even single parents, are significantlymore satisfied with their lives than singlepeople of any age.
4.1 Young adults (18–25 years).
Young adults aged 18 to 25 rank secondwhen it comes to how satisfied they are withlife (57 percent), yet they are least satisfiedwith their financial security for the futureand old age (16 percent). The majority ofthis group have not yet made any personalprovision (58 percent), and only 12 percentsay that they have made “good provision”.As would be expected, people in this agegroup are more likely to have low incomes,that is less than 1,500 EUR (38 percent),and only 43 percent are working.
However, this low level of satisfaction withfinancial security for the future and oldage shows clearly that even for the youngergeneration a low level of provision is notconsistent with a high level of satisfaction.The younger the respondent, the less theyexpect of the state pension system and themore aware they are of how necessary it isto ensure additional retirement income:whilst over-50s still expect to receive 55percent of their final salary in the form of astate pension, under-30s expect to receiveonly 35 percent.
The reason for this generation being so satis-fied can be put down to the fact that theyare optimistic and they still have plenty oftime to make personal provision. This is
4 Results – Specific target
groups in Germany.
If the results of the study as a whole are summarized,
then Allianz’s second Life Aims study, like the first,
shows that a high level of income often goes hand in
hand with a high level of satisfaction with life, a good
level of personal provision and thus satisfaction at
having achieved the aim of financial security for the
future and old age.
shown clearly when it comes to how confi-dent they are that they will still be able to achieve their aim of financial security: 53 percent of young adults believe that theywill be able to achieve financial security,while only 6 percent of over-50s believe this.
Retirement income – from a statepension or from personal provision?
Group: Employed people
Retirement is a long way off, so what should
young people be doing?
They should be making the most of theconsiderable length of time which they stillhave left, since although they have relativelylittle money available, they are not usuallysupporting a family at this point in their lives.This considerable time period is not onlybeneficial because it means young peoplehave more time to save, but also because it
Up to 29 years 30 to 49 years 50 years and older
80%
60%
40%
20%
0%
Question 7.1: What do
you think: What percent-
age of your salary will
you receive as a state
pension?
Question 7.2: Besides
your state pension,
will you have any addi-
tional income during
retirement?
Expected percentage of
final salary to be received
as a state pension.
Percentage of people
who will have an addi-
tional income during
retirement.
allows them to invest in higher risk and thushigher return investments such as stocks andinvestment funds. Relevant information andexplanations should be provided at schoolsand further education establishments, andthe government should provide pension sub-sidies as an incentive as early on as possible.
People in their early twenties have probablygiven hardly a thought to their pensionarrangements. That is understandable, asthey are concentrating on completely differ-ent issues such as planning their studies and
career, starting work or buying their firstproperty. Quite apart from that, retirement isa long way off. All true, yet it is exactly thislong period of time which is of such benefitwhen it comes to investing in personalprovision. This is because over 45 years, itis not only possible to earn a great deal ofinterest, but also to invest in higher riskinvestments which offer even higher rates ofreturn. For example, if someone invests just25 EUR a month in a share-based invest-ment fund with an annual rate of return of6 percent, then after 45 years they will
Manfred Weber, MEP
State Chairperson of the Young Union
of Bavaria
Our social security systems are urgently in need of
reform. The Young Union of Bavaria thus supports
broadly-based reform rather than short-term cor-
rective measures. The young people of today are
caught in a cleft stick, paying a high level of contri-
butions into the social security system although
they can only expect an inadequate level of cover
in times of need or in old age. This is unfair and
is a subject of concern for young people. For
example, it is evident that today’s 30-year-olds will
receive nothing from the nursing care insurance
schemes that they are currently paying into.
Policymakers and the state must come to the
sobering conclusion that as social security systems
become increasingly ineffective, they need to be
less involved in them. Their emphatic message
should be less state involvement and more indi-
vidual responsibility.
Yet the young generation will only become com-
pletely aware of the precarious situation they are
in if policymakers are brave enough to be more
honest with them. Today’s government must be
brutally honest about the fact that the social secu-
rity system is in dire financial straits. Only when
we have achieved a greater degree of credibility
will young people summon up the courage to
stand on their own two feet and provide for their
own futures.
Tobias Kemnitzer,
Director of the German Foundation for
the Rights of Future Generations
To put it briefly but not too briefly, justice for all
generations means that young people today as
well as future generations should have the same
opportunity to satisfy their needs as the genera-
tions which came before them. However, the likeli-
hood of the current generation of “thirty-some-
things” receiving what they need from the state
pension system is small. Confronted with demands
from all directions, we currently feel a little as
though we are in the “rush hour” of life with no
idea if and when this will end: we are expected to
start a family, need to get a foothold on the career
ladder in order to be able to save any money at all,
and at the same time, as the role models of the
new society where people take over responsibility
for their own welfare, should plan at last 30 years
into the future. For many of us, that is simply too
much to expect.
28
Not without reason is the demand for personal
provision products relatively low despite the high
awareness of how important they are. The huge
range of products, from investment funds to the
Riester pension, is more confusing and less trans-
parent than if we were trying to work out what was
the best cell-phone contract to choose. And unlike
a cell-phone contract, this decision is binding
for the rest of our lives. What has happened to
transparency and reliability?
With its Riester pension, the government is show-
ing us exactly how not to go about solving the
problem. Instead of setting standards which poten-
tial investors can easily understand and compare,
for example by introducing a certification system,
the introduction of this supplementary pension
secured by capital stock has caused great confu-
sion. This has ultimately led to people being less
dependent on the competence of pension policy-
makers, but even more dependent on the compe-
tence and goodwill of their advisors. And of course
these advisors are often primarily interested in
swiftly concluding a contract.
have amassed almost 70,000 EUR, only13,500 EUR of which they have actuallycontributed out of their own income:the rest comes from reinvesting the shareincome.
4.2 From people starting a family
to the “sandwich generation”.
According to Allianz’s Life Aims II study,people starting a family are by far the mostsatisfied people in Germany. Although
they usually only have an average income(71 percent earn between 1,501 and4,000 EUR) and rarely a high income(10 percent earn over 4,001 EUR), or fixedassets of over 10,000 EUR (56 percent donot), they are more likely than others tomake personal provision (63 percent), and28 percent even say they are making goodprovision for the future. Correspondingly,when it comes to satisfaction with financialsecurity, they are in second place, justbehind early retirees. By contrast, theyoccupy first place when it comes to dissatis-
Malte Spitz
Executive Committee of Green Youth
The Life Aims II study shows that people in Ger-
many now also believe that a good education
is paramount and should be available to all. The
fact that the German education system is not in
a position to deliver equal opportunity of access to
education is thus all the more alarming.
This should be the main task of any parliament
which believes in justice, allowing individual
freedom and allowing individuals to achieve their
goals.
It is scandalous that there is such a chasm between
the desires of the population and the very real
deficit on the one hand and the inactivity of politi-
cians, particularly at federal state level, on the
other.
Erecting financial access barriers such as study or
childcare levies is not the right way to get more
money into the education system, since these are
simply a further hindrance to precisely those social
classes which already have problems accessing
these institutions.
It is already evident from the trends in the federal
states that this accessibility gap will continue to
influence young people’s decisions for or against
studying. And the experience of other countries
worldwide shows us that private sector student
loans and grant systems will change little. Instead,
it is a central task of the state, and thus also of
society, to finance an education system which is
accessible to everyone, from their early childhood
to when they go to university or begin work.
Johannes Vogel
National Chairperson of the
Young Liberals
The realization that despite all the reforms dis-
cussed and implemented so far, the state pension
will not be sufficient to support people in their old
age seems to have finally dawned on the popula-
tion. For 94 percent of them the solution is clear:
more personal provision is needed. For that rea-
son, policymakers should finally dare to take the
radical step of beginning the gradual transition to
a pension system fully secured by capital stock,
whilst making personal provision compulsory.
This would indeed be a double burden for young
people, who would need to meet the existing
pension claims of those in the generations above
them as well as to invest in their own personal
provision. A convincing argument for it, however,
is the fact that as each day without reform passes
and the demographic imbalance increases, so
does the unavoidable burden of transition to such
a system. Also, an 80 percent majority of people
living in Germany is prepared to curb consumer
spending a little in order to invest in personal
provision. So policymakers just need to be brave
enough to explain that far-reaching reform is
necessary!
29
People starting a family often find them-selves in a difficult situation (see box onthe “rush hour of life”). After the birth oftheir first child, they usually only have oneincome, but at the same time living costsand the extent of necessary personal provi-sion rise. This is the start of a stage in theirlives which usually lasts for two decades ormore, incorporates them buying their firsthome and ends with financing the children’sstudies. Moreover, as the average age offirst-time parents rises and their own parentslive longer, more and more families are con-fronted with the challenge of financing notonly their own lives and personal provision,but also their children’s studies and the careof their parents. Often only a few years from
faction with economic conditions (all thedemographic groups are similarly dissatisfiedwith the political climate).
Satisfaction at different stages of life.
Philipp Mißfelder, National Chairperson
of the Young Union
The Allianz Life Aims II study shows that people
in Germany realize that it is necessary to make
personal provision for old age, but are currently
not in a position to be confident in their own
ability to make this provision. Consequently, they
do not believe they will be able to achieve their
life aim of providing for old age, something which
is made even harder by the fact that the financial
latitude for this is decreasing.
Reforms of the pension system must therefore
recreate confidence by setting a clear course on
the one hand, and increase people’s financial
latitude by reducing state demands on their
income on the other. Both these things can only
be achieved and the demographic time bomb
defused if the current pay-as-you-go scheme is
supplemented with capital-secured products.
Nursing care insurance must be moved into the
private sector, some aspects of health insurance
secured by capital stock and greater emphasis
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.
Björn Böhning, National Chairperson of
the SPD Young Socialists
The typical employment history of a young person
has changed radically in the last few years.
Although youth unemployment in Germany is
relatively low, the traditional progression through
working life is now further and further from reality.
Unpaid internships and further training, part-time
jobs and periods of unemployment are now
common features on people’s resumes, regardless
of what qualifications they have. Young people
are accepting the demands of flexibility, partly
because they have to and partly because they
reflect their own expectations of working in the
modern world.
30
Under these conditions, however, a system based
purely on personal provision for the risks of old
age is almost impossible, especially when we con-
sider that young people potentially also face the
financial burden of starting a family. Only a small
number of our generation will manage to make
up the deficit in provision at a later stage of their
life and only then is that possible of they curb
consumption considerably, which has an obvious
knock-on effect on domestic demand.
Consequently, the collective security provided by
the social security systems will remain crucial,
even in the future. The Scandinavian states prove
that a high level of security provided by the state
encourages innovation, flexibility and economic
prosperity, and is thus truly fair to all generations.
Overall satisfaction
with life
Satisfaction with long-
term financial security
Satisfaction with
political environment
Satisfaction with
economic conditions
Young
adults
Singles /
DINKs
People
starting a
family
Families Early
retirees
80%
60%
40%
20%
0%
pension age themselves, they have becomethe “sandwich generation”.
Single parents are in an even more difficultsituation. In contrast to those starting afamily (19 percent) and young families (9 percent), significantly more single parents(48 percent) have to survive on a lowmonthly income (less than 1,500 EUR).Due to these adverse conditions, more thanhalf of them (53 percent) do not make anypersonal provision.
4.3 50-plus generation.
Over half the 50-plus generation is satisfiedwith life, and a surprising 33 percent are sat-isfied with their financial security, which issignificantly more than the figure for 30 to49 year-olds (28 percent) and 18 to 29 year-olds (16 percent). 23 percent of over-50shave only made a little personal provisionand 48 percent absolutely no provision, butat least this generation expects to receive astate pension of 55 percent of their finalsalary.
Dr. Matthias Meyer,
Head of the Church and Social Policy
Department at the Secretariat of the
German Bishops’ Conference, Bonn
For several years now, policymakers have been
following the same pattern, according priority to
the here and now rather than to the future, to
what we have rather than to what is necessary, to
the interests of today rather than the interests of
tomorrow. Issues which are influential and can be
well organized always win through against those
which are difficult to organize but are particularly
in need of support. This is illustrated particularly
well by the way that public debt is being allowed
to accrue unchecked at the cost of future genera-
tions, as well as the systematic way in which
families with children are being put at a disadvan-
tage, for example in the world of work or terms
of pension arrangements. Having children is being
made economically unattractive.
The result is that our country has fewer and fewer
children. This cannot be allowed to happen,
because a society without children is a society
without a future. Old-age provision without follow-
ing generations is not possible, even if it is secured
by capital stock. Moreover, in a knowledge-based
economy like ours, children must receive the best
possible education and qualifications, yet our edu-
cation system is not achieving this, especially as
regards those children who have already had an
unfavorable start in life. Significantly more effort
must be made in this area in order to improve all
children’s chances of a good education.
We need a society which has the courage to have
children. One of the central tasks of policymakers
and all community groups is thus to support and
strengthen families, because our futures start with
our children.
Brunhilde Raiser
President of the National Council of
German Women’s Organizations
For decades, the National Council of German
Women’s Organizations has been demanding an
independent and secure existence for women,
both during their working lives and thereafter. The
two are interconnected, as old-age provision must
be funded from working income.
Reforms of the social security systems which
guarantee that women will be provided for equally
as well as men affect all areas of society. The labor
market must give women the same opportunities
as men to take on gainful employment. Child care
of a high level must provided for all, so that chil-
dren can grow up with children and parents have
time to work. Women must also be given the same
salary and promotion opportunities as men –
currently women in Germany earn approximately
30 percent less than men for doing the same work
and rarely reach management positions.
As private insurance becomes more and more
important, it is urgent that women are offered
policies which do not have premiums 15 percent
above those paid by men simply because women
are expected to live longer.
31
32
The rush hour of life.
People starting a family are right in the middleof the rush hour of life. In their professionallives they are laying the foundations of theirfuture careers, while in their private liveshaving children may be accompanied by thepurchase of their first home, which demandslong-term financial obligations. Yet at thispoint in their lives at the latest, they need to begin making personal provision for oldage. When doing so they should make fulluse of the state support available, just asthey do when buying a home, and theyshould also make a long-term savings plan.Property is an important component of old-age provision. The Riester pension is a fur-ther basic element. By making full use ofbasic and child subsidies, it is possible toachieve a subsidy level of roughly 30 per-cent. Investing just 100 EUR per month inthe Riester pension would result in amonthly income of just under 400 EUReach for both father and mother from theage of 65.
However, at this age, those who have notachieved their aims of financial securityare less likely to believe that they will doso (6 percent compared to 53 percent of 18 –29 year-olds).
What is very difficult at this age is the situa-tion for single parents. Of all respondents,they receive the lowest income (62 percentof them receive less than 1,500 EUR amonth) and thus have almost no possibilityof doing anything more towards theirpersonal provision.
Level of provision achieved at differentstages of life.
Those 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.
Young
adults
Singles /
DINKs
People
starting a
family
Families Early
retirees
100%
80%
60%
40%
20%
0%
Good level of provision
Some provision
No private financial provision
33
Life Aims I I, 2005: Appendix.
This Allianz “Life Aims” study focused onthe issues surrounding people’s personalobjectives in life, their satisfaction with lifeand their financial security at differentstages of their lives. The objective of thestudy was to investigate the similarities anddifferences in these areas between peopleliving in the four countries Germany,France, Italy and Spain.
I.1 Methodological approach.
In order to collect the life aims data, a stan-dardized questionnaire was used to carryout computer-assisted telephone interviews(CATI) in the four countries Germany,France, Italy and Spain. The universe chosenfor the study was people aged 18 to 75 livingin private households who spoke the nativelanguage of the country concerned. Toensure statistically-accurate statements, ineach country a representative sample ofat least 1,000 people was chosen. Thesampling method used was comparable ineach country, and is described here usingGermany as an example.
The basis for the survey in Germany was theADM telephone sampling method developedby the Working Group of the Federationof German Market and Social ResearchInstitutes (ADM). In Germany, the ADMtelephone sampling method is the best wayof using random digital dialing (RDD),which itself ensures the necessary random-ness of samples. ADM-RDD numbers aregenerated by removing the last two digits oflisted telephone numbers and replacingthese with all 100 possible pairs of digits.The digits in the newly generated numbersare then put into a random order. A so-called 100 block will thus contain unlistednumbers and numbers which do not exist.
This provides a basis of telephone numberswhich in principle allows every landline inGermany to be accessed. Non-existentnumbers are included as neutral results andas such do not create a problem.
Ideally, representative surveys are carriedout using stratified random sampling, wherea sampling allocation plan stipulates howmany interviews should be carried out withpeople representative of different strata (e.g. federal state, size of municipality, age,gender, household income), so as to avoid asfar as possible systematic biases within thesample. This method was used in the LifeAims II study to ensure a representative dis-tribution of the interviews over the differentstrata.
Project design and implementation.
The Nuremberg-based market research insti-tute GfK was commissioned with the designand implementation of the survey and thesubsequent data analysis. As the largest mar-ket research institute in Germany and thefourth largest in Europe, GfK has a networkof national institutes and can thus guaranteehigh-quality data collection of comparablequality in all countries. GfK assisted Allianzin creating the questionnaire, which wasthen subjected to a pre-test in all four coun-tries to determine its suitability in the field.The survey itself was carried out betweenJune 15 and August 5, 2005, with eachinterview lasting an average of 30 minutes.
I Study objectives
and methodology.
34
Table 7: Data collection. Number of interviews
per country and period.
I.2 Rating scale used.
The respondents were asked to rank theiranswers on a scale from 1 to 7, where 1 cor-responded to “Does not apply at all” and 7to “Applies 100 %”. For the purposes of dataanalysis, the scale values were combinedinto three boxes. The top box, “Applies”,contains values 6 and 7, the middle box,“Indifferent”, the values 4 and 5, and thelow box, “Does not apply”, the values 1, 2and 3 (see Illustration 1: Data collection.Scale used).
Illustration 1: Data collection. Scale used.
Please rank your answer on a scale of 1 to 7,
where 1 means “Does not apply at all” and 7
means “Applies 100 %”
I.3 Type of analysis used.
In addition to purely descriptive analysis,regression analysis was used. Regressionanalysis examines the type of relationshipbetween two variables, the objective beingto predict the value of one dependentvariable as a function of one or more inde-pendent variables.
Germany
Number of
interviews
Period
France
n = 1,003 15 June –19 July 2005
n = 1,000 27 June –11 July 2005
Italy n = 1,001 04 June –19 July 2005
Spain n = 1,000 04 June –05 Aug 2005
In the “Life Aims” project, the variable“Satisfaction with life” can be regarded as adependent variable. Satisfaction with lifecan be dependent on various factors, forexample satisfaction with
• family, friends and acquaintances,• financial security in the future and old age,• health care,• the political climate,• the economic climate,• opportunity for leisure activity and hobbies,• or the net household income.
Regression analysis examines whether theseindependent variables influence the depen-dent variable “Satisfaction with life”.
Procedure.
The data from two variables, e.g. “Satisfac-tion with life” and “Satisfaction with finan-cial security for the future and old age”,are measured for each person. Regressionanalysis then serves as a tool to investigatethe correlation between these two charac-teristics.
Once information on the two characteristics“Satisfaction with life” and “Satisfactionwith financial security for the future and oldage” has been collected, this is plotted forall of the individuals in the sample using ascatter diagram. Each point on the diagramrepresents an individual in the sample. Thescatter diagram can have various differentforms and gives the first indication of thetype of relationship (see Illustration 2:Different scatter diagrams).
In the next step, the clusters are describedusing the most relevant mathematical func-tion. If the cluster indicates a relationship,then the strength and type of this relation-ship is of interest. Diagram A suggests alinear relationship, as the cluster can bedescribed well by a line. Diagram C indi-cates a quadratic relationship, while diagramB indicates no relationship between the twocharacteristics shown.
Low Box (1–3) Middle Box (4–5) Top Box (6–7)
“Does not apply“ “Indifferent“ “Applies“
Does not apply at all Applies 100%
1 2 3 4 5 6 7
Illustration 2: Different scatter diagrams.
35
Life Aims I I, 2005: Appendix.
A mathematical formula is then used tocalculate the regression line which best fitsthe cluster, determine its slope and at whatpoint it intercepts the y axis. The aim hereis to achieve an optimal fit between theregression line and the data points. Thusthe regression line is an indicator of therelationship between characteristic X (Satisfaction with financial security) andcharacteristic Y (Satisfaction with life).
In addition to the regression line, anothermeasure is also calculated to determine thequality of the regression model. This is thecoefficient of determination, which showshow well the individual data points fit tothe line of regression. The coefficient ofdetermination is always between 0 and 1,and the closer the value is to 1, the betterthe quality of the regression model. Basi-cally, it can be said that values of 0.5 andabove show a stable model with very validdata. A coefficient of determination of 0.59was a achieved for the data collected inGermany for the Life Aims II study.
Summary.
With the help of regression analysis, it ispossible to discover how strong the influ-ence of one or more independent variablesis on one dependent variable. With regardto life aims, it is thus possible to determinewhich independent variables have thegreatest influence on satisfaction with lifeand which have little or no influence.
Sati
sfac
tio
n w
ith
lif
e
Satisfaction with financial securitya
Sati
sfac
tio
n w
ith
lif
e
Satisfaction with financial securityb
Sati
sfac
tio
n w
ith
lif
e
Satisfaction with financial securityc
36
II.1 Demographic development.
Table 8: Total population (mean)
today and 2050.
Table 9: Life expectancy of men and women
(years) today and 1960.
Table 10: Dependency ratio today and 2050:
Number of people aged 65 and over
per 100 people aged 15–64 (people of
working age).
Table 11: Children per woman
(reproduction rate) 1965 and 2004.
II.2 Economic situation.
• Germany: In the last 10 years economicgrowth has been significantly slower thanin the other EU states.
• France: The economy has picked up since2003 but high unemployment is a significantproblem.
• Italy: Economic growth is slower than theEU average, unemployment is relativelyhigh, and public debt is high.
• Spain: Economic growth is strong and abovethe EU average (thanks to private demand),yet unemployment is high.
Table 12: Macro-economic ratios for all
countries.
II Macro-economic data for the
four countries Germany, France,
Italy and Spain.
Germany
in million 2005 2050
France
82.9 75.1
60.6 64.0
Italy 58.2 52.3
Spain
Source: National statistics offices
42.9 53.2
Germany
1965 2004
France
2.5 1.3
2.8 1.9
Italy 2.7 1.3
Spain
Source: National statistics offices
2.9 1.2
Germany
2005 2050
France
28.5 51.0
25.0 51.4
Italy 29.7 63.2
Spain
Source: National statistics offices
24.5 55.1
Germany
in years Men Women
1960
Men Women
2005
France
66.9
66.9
72.4
73.6
75.6
76.7
81.3
83.8
67.2 72.3 77.8 83.7
67.4 72.2 77.7 84.0
Italy
Spain
Source: National statistics offices
Germany
GDP growth 2005 (real).
France
1.0
1.6
Italy – 0.1
Spain 3.3
37
Life Aims I I, 2005: Appendix.
II.3 Social security systems:
Organization of pension
systems.
Germany.• 3-pillar system (state pension, company
pension, personal pension)• State pension: compulsory pension scheme
financed by pay-as-you-go tax contributions• Various reforms intended to stabilize
the financial situation: 2004 suspension of pensions adjustment, basic pension(Rürup pension)
• Personal pension plans: Riester, basic pension
• 5 ways of organizing pensions throughcompanies
France.• 3-pillar system (state pension, company
pension, personal pension)• State pension: compulsory pension scheme
financed by pay-as-you-go tax contributions• Company pension schemes: ARRCO, AGIRC• 2004: introduction of individual retirement
savings plans, e.g. PERCO, an importantpension product
• No reforms planned in the immediate future
Italy.• 3-pillar system (state pension, company
pension, personal pension)• State pension: compulsory pension scheme
financed by pay-as-you-go tax contributions• Second and third pillars not currently well
developed• Reforms have been planned but not imple-
mented for years, current further delay inimplementation, due in Autumn 2005
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)
Germany
Disposable income of private households
per capita 2004 (in EUR).
France
16,700
16,300
Italy 15,400
Spain 11,900
Germany
Unemployment rate 2005 (EU definition).
France
9.6 %
9.6 %
Italy 7.7 %
Spain 9.4 %
Germany
Amount of tax paid.
France
21.5 %
27.7 %
Italy 30.1 %
Spain 23.0 %
Germany
Amount of tax paid plus contributions.
France
36.0 %
44.0 %
Italy 42.6 %
Spain 35.6 %
Germany
Home ownership rate 2004.
France
43 %
57 %
Italy 73 %
Spain 87 %
38
Having a good education/training.
Living healthily.
Financial security for the future/old age.
Having my own children.
III.1 Results – Comparison of countries.
Enjoying life right now.
Owning my own home.
Being in a long-term relationship.
Individuality and the ability to make my
own decisions.
III Survey results.
Personal life aims.
Germany: 88%
France: 73%
Italy: 88%
Spain: 88%
Germany: 66%
France: 45%
Italy: 43%
Spain: 46%
Germany: 70%
Germany: 39%
France: 74%
France: 44%
Italy: 88%
Italy: 44%
Spain: 91%
Spain: 53%
Germany: 78%
Germany: 34%
France: 73%
France: 32%
Italy: 86%
Italy: 26%
Spain: 78%
Spain: 32%
Germany: 73%
Germany: 47%
France: 80%
France: 43%
Italy: 79%
Italy: 32%
Spain: 82%
Spain: 45%
Germany: 60%
Germany: 51%
France: 74%
France: 57%
Italy: 87%
Italy: 65%
Spain: 86%
Spain: 66%
Germany: 80%
Germany: 72%
France: 74%
France: 60%
Italy: 77%
Italy: 68%
Spain: 73%
Spain: 68%
Germany: 75%
Germany: 53%
France: 54%
France: 35%
Italy: 77%
Italy: 42%
Spain: 74%
Spain: 50%
Germany: 75%
Germany: 63%
France: 81%
France: 55%
Italy: 81%
Italy: 59%
Spain: 78%
Spain: 61%
Question 3: Now l’d
like to mention several
possible personal life
aims. Please tell me how
important these are to
you.
Question 3a: And to
what extent would you
say you have been able
to achieve this aim so far?
39
Life Aims I I, 2005: Appendix.
Career development.
Having enough opportunity for leisure activity
and personal hobbies.
Discovering the world – travel abroad.
Civic engagement.
All respondents (N = approx. 1,000 each country).
Top 2 boxes
Financial security for the future and old age is the life aim
where there is by far the greatest discrepancy between
importance and achievement.
Germany: 65%
Germany: 41%
France: 62%
France: 33%
Italy: 76%
Italy: 33%
Spain: 77%
Spain: 34%
Germany: 62%
Germany: 41%
France: 63%
France: 35%
Italy: 65%
Italy: 29%
Spain: 75%
Spain: 43%
Germany: 38%
Germany: 24%
France: 44%
France: 20%
Italy: 63%
Italy: 17%
Spain: 47%
Spain: 20%
Germany: 30%
Germany: 28%
France: 34%
France: 24%
Italy: 66%
Italy: 25%
Spain: 32%
Spain: 22%
40
Life aims.
Having a good education, financial security and having one’s
own children are some of the most important life aims.
Europe Germany France Italy Spain
Having a good education/training1 6 1 2
Living healthily7 3 1 1
Financial security for the future/
old age3 6 4 5
Having my own children5 1 5 5
Enjoying life right now6 2 6 4
Owning my own home10 3 3 3
Being in a long-term relationship2 3 7 10
Individuality and the ability to
make my own decisions4 10 7 9
Career development8 9 9 7
Having enough opportunity for lei-
sure activity and personal hobbies9 8 11 8
Discovering the world –
travel abroad11 11 12 11
Civic engagement12 12 10 12
84%
81%
79%
79%
78%
77%
76%
70%
70%
66%
48%
41%
Question 3: Now l’d
like to mention several
possible personal life
aims. Please tell me how
important these are to
you.
Top box (6+7)
41
Life Aims I I, 2005: Appendix.
Factors which influence the achievement
of life aims.
In Germany, the expectations of the state are higher than in
France or Spain, where friends and acquaintances have more
influence.
You personally.
Family.
Your employer.
Economy.
Politics/government.
Friends/acquaintances.
Germany: 80%
France: 71%
Italy: 75%
Spain: 80%
Germany: 55%
France: 57%
Italy: 59%
Spain: 63%
Germany: 28%
France: 12%
Italy: 25%
Spain: 15%
Germany: 23%
France: 36%
Italy: 27%
Spain: 36%
Germany: 40%
France: 29%
Italy: 35%
Spain: 43%
Germany: 39%
France: 28%
Italy: 44%
Spain: 48%
Question 4: To what
extent would you say the
achievement of your
aims depends on the
following persons and/or
institutions?
42
Satisfaction with life.
People in Spain are most satisfied with their lives, followed by
people by people in Germany.
Germany
France
Italy
Spain
52%
42%
49%
56%
40%
51%
44%
37%
8%
7%
7%
7%
Very satisfied Very dissatisfied
Question 1: If you take a
look at your life so far,
how satisfied are you in
general with your life?
Top box (6+7)
Middle box (4+5)
Low box (1–3)
43
Life Aims I I, 2005: Appendix.
Question 28: When you
think about your future,
what causes you to be
most concerned with
respect to old age?
Worries about old age.
Own health/illnesses.
Environmental pollution/climate change.
Financial provision for family members
and children.
General economic development.
Germany: 48%
France: 45%
Italy: 63%
Spain: 84%
Europe: 60%
Germany: 44%
France: 55%
Italy: 62%
Spain: 74%
Europe: 59%
Germany: 39%
France: 53%
Italy: 59%
Spain: 69%
Europe: 55%
Germany: 49%
France: 46%
Italy: 53%
Spain: 65%
Europe: 54%
Top box (6+7)
44
People’s key concerns are their own health and environ-
mental pollution/climate change. People in Spain worry most.
Own financial security.
Accommodation/level of rents.
Germany: 32%
France: 38%
Italy: 43%
Spain: 63%
Europe: 44%
Germany: 22%
France: 24%
Italy: 28%
Spain: 55%
Europe: 32%
Change in societal values, social coldness.
Limited mobility.
War/terrorist attacks.
Loneliness (in old age).
Germany: 42%
France: 46%
Italy: 56%
Spain: 62%
Europe: 51%
Germany: 34%
France: 45%
Italy: 49%
Spain: 76%
Europe: 51%
Germany: 28%
France: 36%
Italy: 58%
Spain: 64%
Europe: 46%
Germany: 32%
France: 38%
Italy: 47%
Spain: 62%
Europe: 45%
45
A third of the German population believe that they have
provided well for the future, however long they may live.
Financial provision for a long life.
I have made (very) good provision.
Germany: 33%
France: 17%
Italy: 20%
Spain: 26%
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 pro-
vision for your retirement.
Do you think that you
have already made good
provision for living
longer?
Top box (6+7)
46
Willingness to give up some consumer
expenditure to provide for the provision.
More people in Germany than anywhere else forgo consumer
expenditure to make personal provision.
Have you already given up some current
consumption?
Would you be prepared to forgo some current
consumption?
Germany 63%
France 36%
Italy 32%
Spain 30%
Yes
27%
16%
15%
20%
30%
33%
36%
29%
43%
51%
49%
51%
Yes, I would be totally
prepared to do so
No, I would not be at all
prepared to do so
6%
%
%
Question 26: Have you
already given up some
things in order to make
personal provision for
your future/your old age?
Question 24: In principle,
would you be prepared
to forgo some current
consumption to provide
for the future (i. e. your
expenditure on living
expenses, leisure time,
hobbies and vacations)?
Group:
Not yet retired.
Top box (6+7)
Middle box (4+5)
Low box (1–3)
47
Taking precautions
I regularly put a little money away for emergencies.
I have supplementary nursing insurance/supplementary
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.
Germany France Italy Spain
0% 10% 20% 30% 40% 50% 60% 70%
* 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 …
Long-term financial planning.
Question 7: Now I would
like to read you a few
statements about long-
term financial planning.
Can you tell me which of
these are true for you?
Top box (6+7)
48
… and people in Germany have made the highest level of
personal provision.
Long-term financial planning.
Informed
I have already had someone calculate my state pension.
I know exactly how much money I will have available when
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.
I'm not concerned about my situation when I reach retire-
ment age because I have already made good provision
for the future.0% 10% 20% 30% 40% 50% 60% 70%
Germany France Italy Spain
Question 7: Now I would
like to read you a few
statements about long-
term financial planning.
Can you tell me which of
these are true for you?
Top box (6+7)
49
Financial products for personal provision.
Insurance.
Life insurance (incl. term life insurance).
Occupational disability insurance.
Personal pension.
Company pension.
Supplementary nursing insurance.
Private health insurance.
Riester pension.
Individual pension saving plans.
Guaranteed private provision plan.
Question 9: If you were
asked today to choose
financial products for
personal provision, which
of the following financial
products would you
choose to provide for
your future?
Basis: n = excluding
“Not sure” answers.
Germany: 62%
France: 60%
Italy: 53%
Spain: 31%
Germany: 47%
France: 31%
Italy: 38%
Spain: 21%
Germany: 24%
Spain: 41%
Spain: 14%
Germany: 61%
France: 31%
Italy: 32%
Spain: 24%
Germany: 59%
France: 47%
Italy: 40%
Spain: 26%
Germany 57%
France: 26%
Italy: 33%
Spain: 23%
Germany: 55%
France: 67%
Italy: 34%
Spain: 12%%
50
Financial investments.
Financial investment (e. g. savings plans,
savings account)
Investment funds.
Stocks/shares.
Building loan agreement.
Germany: 66%
France: 67%
Italy: 58%
Spain: 30%
Germany: 43%
France: 26%
Italy: 40%
Spain: 23%
Germany: 28%
France: 30%
Itay: 20%
Spain: 14%
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.
51
III.2 Results – Germany.
Personal life aims and degree of achievement.
Financial security for the future/old age is the aim which the
least people have achieved.
Having a good education/
training
Being in a long-term relationship
Financial security for the future/
old age
Individuality and the ability to
make my own decisions
Having my own children
Enjoying life right now
Living healthily
Career development
Having enough opportunity for leisure
activity and personal hobbies
Owning my own home
Discovering the world – travel abroad
Civic engagement
88%
72%
80%
84%
78%
40%
75%
65%
75%
80%
73%
56%
70%
50%
65%
51%
62%
55%
60%
73%
38%
46%
30%
72%
Well achieved
28%
16%
60%
35%
20%
44%
50%
49%
45%
27%
54%
28%
Poorly achieved
Top box (6+7)
Question 3: Now I’d
like to mention several
possible personal life
aims. Please tell me how
important these are to
you. Basis: n = 1,003.
Question 3a: And to
what extent would you
say you have been able
to achieve this aim so far?
Basis: n = 1,003.
52
Satisfaction with some aspects of life.
People are most satisfied with their family and friends and
least satisfied with the economic and political environment.
72%
45%
45%
28%
22%
37%
37%
44%
6%
18%
18%
28%
15% 41% 44%
26% 71%
Very satisfied Very dissatisfied
Your family, your friends
and acquaintances
Your healthcare
Your time for leisure
and hobbies
Your financial provision
for the future/old age
General economic
conditions
Political environment3%
Question 2: Now I’m
going to list some aspects
of your life. Would you
please tell me how
satisfied you are actually
in each instance?
Basis: excluding
“Not sure” answers.
Top box (6+7)
Middle box (4+5)
Low box (1–3)
53
General economic development in Germany.
Own health/illnesses.
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.
Under 29 years 30 to 49 years Over 50 years
0% 10% 20% 30% 40% 50% 60% 70%
Worries about old age.
With the exception of concerns about financial security,
young people worry less than others about their old age.
Top box (6+7)
Question 28: When you
think about your future,
what causes you to be
most concerned with
respect to old age?
Basis: excluding
“Not sure” answers.
54
Political reforms.
Top box (6+7)
10%
94%
I feel very well informed
about political reforms.
I will have to take on
responsibility for providing
for my own future.*
Question 22: Personal
financial planning is cur-
rently a topic of numerous
political reforms. How
well informed are you
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.
55
Long-term financial
planning is … 62% 27% 11%
very important not at all important
General conditions for
achieving my aims have
improved over the last
five years …
27% 46% 27%
clearly improved clearly deteriorated
Question 6b: If you now
think about your personal
financial situation, do you
believe that long-term
financial planning is
important for achieving
your life aims?
Basis: n = 1,000 excluding
“Not sure” answers.
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
and general conditions.
Long-term financial planning is important, but the conditions
for achieving this are not improving.
Top box (6+7)
Middle box (4+5)
Low box (1–3)
56
Life aim of financial security
for the future.
Under-30s are optimistic about achieving their goal of being
financially secure in the future.
Group: Convinced they will achieve
their aim.
Group: Not convinced they will achieve
their aim.
53%
41%
72%
44%
49%
18%
49%
32%
79%
52%
43%
6%
7% 5%
Socio-demographic aspects
Up to 29 years
30 to 49 years
50 years and over
Capital investment assets
less than 10,000 EUR
Low income
Average income
High income
%
% 5%
57
Informed
I have already had someone calculate my state pension.
I know exactly how much money I will have available
when 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.
I’m not concerned about my situation when I reach retirement
age because financially, I’m very well provided for.
Taking precautions
I regularly put a little money away for emergencies.
I have supplementary nursing insurance/supplementary
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.
48%
39%
39%
37%
32%
50%
31%
27%
25%
20%
Long-term financial planning.
Only a small proportion of the population has actually made
long-term financial plans.
Question 7: Now I would
like to read you a few
statements about long-
term financial planning.
Can you tell me which of
these are true for you?
n = 1,003.
Top box (6+7)
58
Long-term financial planning.
A large percentage of the German population has not made any
personal provision for the future.
Top box (6+7)
Middle box (4+5)
Low box (1–3)
An index for actual long-term financial planning
was developed on the basis of 4 important
variables.*
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).
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%)
59
Top box (6+7)
Satisfaction depending on level
of provision made.
There is an obvious link between financial planning and
satisfaction with life.
Overall satisfaction with life. Satisfaction with financial security for the
future/old age.
59%
51%
50%
45%
25%
21%
Good provision
Some provision
No provision
60
Satisfaction with life.
Only when people are younger does insufficient
personal provision not have a negative effect on their
satisfaction with life.
Up to 29 years 30 to 49 years 50 years and older
80%
60%
40%
20%
0%
Good provision
Bad provision
Top box (6+7)
61
Satisfaction with current long-term
financial plans.
The respondents who are dissatisfied with their long-term
financial plans are those who are younger and/or have lower
incomes.
Group: (very) satisfied with long-term
financial plans.
Group: (very) dissatisfied with long-term
financial plans.
30%
57%
46%
43%
16%
76%
39%
28%
42%
30%
52%
11%
64% 44%
19% 5%
Socio-demographic aspects
Capital investment assets
less than 10.000 EUR
Employed
Up to 29 years
30 to 49 years
50 years and older
Low income
Average income
High income
%
5%
62
Satisfaction with current long-term
financial plans.
The respondents who are satisfied with their long-term
financial plans have done significantly more to provide for
their futures.
Group: (very) satisfied with long-term
financial plans.
Group: (very) dissatisfied with long-term
financial plans.
57%
51%
14%
20%
15%
42%
55%
23%43%
Behavoir
Every month I invest
at least 10% of my
net income in my
personal provision.
I have supplementary nursing
insurance/supplementary
health insurance in case of
unexpected illness.
I have arranged long-term
personal provision with
a financial expert (from
banking, insurance).
I know exactly how much
money I will have available
when I reach retirement age.
Top box (6+7)
63
0,1 0,2 0,3 0,4
60%
40%
20%
0%
Actual satisfaction
Voic
ed s
atis
fact
ion
Friends/colleagues
Partner/spouse
Independent financial advisors/brokers
My personal bank advisor
Family
My insurance company
My bank
Consumer bureaus
My personal
insurance advisorMy own research
Satisfaction with advice and influence on
long-term financial planning.
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.
Correlation of voiced satisfaction with
actual satisfaction.
All data in % – correlation.
64
Willingness to give up some consumer
expenditure to provide for the future.
82% already forgo or would be prepared to forgo some
consumer expenditure to invest in personal provision
for old age.
18% do not forgo expenditure and would
not be prepared to forgo any.
38% forgo some expenditure and would
be prepared to forgo more.
18% do not forgo any expenditure but
would be prepared to forgo some.
26% forgo some expenditure but would
not be prepared to forgo more.
Question 26: Have you
already given up some
things in order to make
personal provision for
your future/your old age?
Question 24: In principle,
would you be prepared
to forgo some current
consumption to provide
for the future (i.e. your
expenditure on living
expenses, leisure time,
hobbies and vacations)?
* Group: Not yet retired.
65
Income at particular stages of life.
Single parents and older persons who are single have
lower incomes and thus little financial latitude for personal
provision.
9% 48% 45% 62%
48% 48% 36%
4% 7% 2%
65% 56% 45%
77%
14%
40%
Low income
up to 1,500 EUR
Average income
1,501–4,000 EUR
High income
over 4,001 EUR
Capital investment assets
less than 10,000 EUR
Young families (18–40)
with at least 2 children
Single parent with
child (24–40)
Single, 35–49 Single, 50–65
9%
4% 7% 2%14%
67
Imprint.
Life Aims II, 2005 – People in Germany, France,
Italy and Spain
November 2005
Publisher:
Allianz AG
Königinstrasse 28
80802 Munich, Germany
Market research institute:
GfK Marktforschung GmbH, Nuremberg, Germany
Project managers: Karsten John,
Division Manager, Financial Market Research
Birgit Ströhlein,
Research Consultant, Financial Market Research
Allianz AG project team:
Nicolai Tewes, [email protected]
Constanze Mayer
Allianz AG, Group Communications,
Munich, Germany
Dr. Martin Marganus
Folker Michaelsen
Allianz AG, Methods & Controlling,
Munich, Germany
Bérangère Auguste-Dormeuil,
AGF, Head of Communications, Paris, France
Martin Bendrich, [email protected]
Allianz Versicherungs-AG,
Corporate Communications, Munich, Germany
Karl-Friedrich Brenner,
Dresdner Bank AG,
Media Relations, Frankfurt /Main, Germany
Ulrich Hartmann, [email protected]
Allianz Private Krankenversicherungs-AG,
Corporate Communications, Munich, Germany
Günter Kast, [email protected]
Allianz Global Investors AG, Munich, Germany
Jean-Louis Liedana Malga,
Allianz, Compania de Seguros y Reaseguros, S. A.
Subdireccion General, Barcelona, Spain
Marc Savani, [email protected]
Deutscher Investment-Trust Gesellschaft für
Wertpapieranlagen mbH (dit),
Corporate Communications,
Frankfurt /Main, Germany
Dr. Markus Schwarzer,
Allianz Lebensversicherungs-AG,
Corporate Communications, Stuttgart, Germany
Christian Teichmann,
Mondial Assistance
Corporate Communications, Munich, Germany
Valerio Vagone, [email protected]
RAS – Riunione Adriatica di Sicurtà,
Comunicazione e Immagine, Milan, Italy
Macro-economic data:
Dr. Michael Heise
Dr. Renate Finke
Dr. Michaela Grimm
Dr. Mathias Moersch
Dr. Jürgen Stanowsky
Allianz AG, Group Economic Research
Frankfurt /Main and Munich, Germany
Design:
SchumacherGebler KG, Munich, Germany
Print:
Walter Biering GmbH, Munich, Germany
Disclaimer/Copyright
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contributions, is protected by copyright.
Reproduction, dissemination and publishing of
the study, including abstracts thereof, is subject
to written approval from Allianz AG. All other
rights are reserved.
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