During the 85th celebration of World Savings Day this year, the public will be reminded about the importance of saving, not only for themselves, but also for the economy as a whole. This was the main reason why the World Society of Savings Banks established this annual event at a Milan gathering on October 31, 1924.
Saving for old age more important than ever
Old-age provision core issue
Originally, World Savings Day was introduced specifically to educate children and young adults about saving. During the last decades, both the meaning and the target group have changed. Today, World Savings Day is addressed to the whole population and all age groups. During the 1990s, accumulating capital and supplementary old age provision came onto the agenda. Today it is the initiative's main focus. The current financial crisis underlines the importance of additional individual pension provision to accumulate sufficient wealth to guarantee financially carefree twilight years.
Whoever wants to shape their own future, should not neglect to save their money wisely
Effect of financial crisis on savings unclear
Until now, the financial crisis does not appear to have a negative influence on savings behaviour. On the contrary: according to recent national statistics about the individual savings rate, people tend to view the financial crisis as an incentive to save rather than consume. Germany's current savings rate is stable and expected to remain constant at 11.2 percent until the end of 20091. The same is true for Austria, where the savings rate of 12 percent is expected to increase by the end of this year2. Even in the US, where the savings rate has rested along the zero baseline throughout the last years, the ratio has risen to 3.7 percent lately3.
On the other hand, Italians, traditionally some of the world's keenest savers, have reduced their propensity to save. Their comparably high savings rate of 15.2 percent has decreased by 0.4 percent during this year's second trimester, due to households' reduced earnings4. This may herald a new attitude towards saving. A recent study revealed that every third German plans to save less in the future, citing increasing distrust in the financial markets as the primary reason.
Saving less could lead to pension gap
Despite having increased overall awareness of the importance of saving, the financial crisis also has lead to uncertainty about the markets and various savings instruments. This could eventually lead to an irrational scenario: people save less in times when they earn less - despite the crisis illustrating how important it is to build reserves for lean times.
The importance of saving for old age will be increasingly put on the agenda by other global trends as well. Allianz' recently published brochure "Shape your future" deals with the consequences of demographic change. The once stable population pyramid has turned upside down. Looking forward, societies will have more elderly than younger persons, which means statutory pensions will hit their limits. Therefore, it is imperative, that every individual makes independent provisions.
Shape your future
Another issue is that the segment of the population concerned lacks information about the matter. "They don't know how high their private pension contributions ought to be," says Brigitte Miksa, demography expert and head of International Pensions at AllianzGI. Miksa has been commissioned by the OECD to research pension gaps, in order to promote public awareness of the issue. "The OECD realizes that overall old-age provision is at risk in some countries," says the researcher. "It's a relevant topic wherever people need to save more on a voluntary basis, although there is no legal requirement to do so."
The core message of the World Savings Day is more prevalent than ever. Whoever wants to shape their own future, should not neglect to save their money wisely in order to fill possible pension gaps.
1 Statistisches Bundesamt, Pressemitteilung Nr. 410 vom 29.10.2009
2 Statistik Austria, Einkommen und Sparen der privaten Haushalte, 06.10.2009
3 Bureau of economic analysis, GDP and the economy Q/2009, September 2009
4 Istat, Reditto e risparmio delle famiglie, 28.10.2009
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