PressNewsStudiesCatch 22: Why pension’s a tension for millennials

Catch 22: Why pension’s a tension for millennials

Service & Contacts

Allianz Group Communications
Koeniginstr. 28
80802 Munich
Germany

Contact overview

Receive the latest Allianz news.

Newsletter

Follow Allianz in the social networks:

Facebook
Twitter
Google+
LinkedIn

  • Contact

  • Newsletter

  • Social Media

As pension reforms sweep through the world, millennials have to walk a tightrope between living the good life today and building a retirement nest egg

 

Allianz SE
Munich, Oct 21, 2016

Allianz-Brigitte Miksa, head of Allianz International Pensions: “The ‘live-for-today’ message from peers drowns out the urgency of financially securing your future”

Brigitte Miksa, head of Allianz International Pensions: “The ‘live-for-today’ message from peers drowns out the urgency of financially securing your future”

Once upon a time, you were either a grasshopper or an ant – you either jumped through all your earnings to enjoy or you diligently saved every penny for a comfortable retirement.

 

Today, we face the pressure to be both. On the one hand, credit cards and loans let us live the good life even before we can afford it. On the other, we must put aside more money for retirement than did generations before us.

 

This, according to Brigitte Miksa, the head of Allianz International Pensions, is one of the key takeaways from the latest Allianz Pension Sustainability Index (PSI).

 

The sustainability of pensions systems worldwide has been steadily improving over the past decade, thanks to reforms by governments.

 

“While this is good news for society, it has consequences for individuals,” says Miksa. “A sustainable system implies that people continue to get benefits when they retire, but the changes made to ensure these systems remain sustainable mean the benefits will be less – maybe even far less – than what today’s retirees get.”

 

As populations in many countries age, the trend is toward placing greater responsibility on individuals to contribute more to their own retirement security. But a conflicting message comes from society. “The ‘live-for-today’ message from peers drowns out the urgency of financially securing your future,” Miksa says.

 

The latest PSI shows the most sustainable pension systems for the long run are in Australia, Denmark, Sweden, the Netherlands, Norway and New Zealand. But sustainability does not reflect “adequacy”, the amount an individual needs to meet basic requirements. On this parameter, the Netherlands, Denmark, Norway and Switzerland have the highest ranking.

 

CHANGING WORK PATTERNS

 

Just a third of workers usually concerns itself with pension issues before the age of 50-55, when retirement looms, Miksa says.

 

“I don’t expect the millennials (those born in the 1980s and 1990s) to be different. They - like previous generations - will find that if they don’t have a hand in the game before then, it will be difficult to ensure a comfortable retirement.”

 

With freelancing and self-employment on the rise, we’re headed towards a more ‘casualized’ workforce. A recent survey suggested that in 2015, about a third of all workers in the United States – about 54 million people – had engaged in some freelancing over the past year.

 

New technologies allow a fast match between jobs and independent contractors willing to do them. But such an informal work culture has long-term implications.

 

Social security schemes are designed around formal employment. Workers need to register and pay their share, which determines their benefits. Independent professionals are usually not covered under these systems and fall through the cracks of state and occupational pension schemes. This puts the onus of retirement planning on the individual.

 

However, millennials have more opportunities today than other generations such as baby boomers did.

 

“Previous generations were bound by the rigid structures of statutory pensions and occupational pensions,” Miksa notes. “Millennials have far greater choices to decide where and when they want to invest for better returns.”

  Forward Looking Statement disclaimer

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:

 

  Press contact

Petra Brandes
Allianz SE
Phone +49.89.3800-18797
Send email

More at allianz.com

Brexit and Beyond

Allianz-Brexit and Beyond
Mar 29, 2017 | Allianz SE

What is the UK government’s Brexit strategy and key issues in the exit talks? How will Brexit affect UK companies and its financial markets? What is the long-run impact of Brexit? Allianz economists provide some answers...

More...

Unity in Diversity

Allianz-Unity in Diversity
Mar 28, 2017 | Allianz SE

Workplace diversity - be it gender, cultural or social – allows a company to reach its full potential. Thanks to its initiatives, Allianz has a healthy mix of employees, shows our HR Fact Book 2016.

More...

The Bigger Picture

Allianz-The Bigger Picture
Mar 27, 2017 | Allianz SE

Encouraging the development of emerging economies and micro businesses is a big step in social inclusion. Here’s how Allianz contributes to the conversation...

More...
More...