Are investors too reliant on the state?

Governments are struggling to balance their books and the global economy is in a precarious state, yet investors firmly believe that the state will still be able to contribute significantly to their retirement income. So, are investors being realistic or setting themselves up for a fall?

15 June 2016

Investors are realistic about how long they will live in retirement (21.2 years) and the need to diversify their sources of income for retirement, but are investors too optimistic about how much the state will be able to contribute to their retirement income?

Schroders 2016 Global Investor Study found:

  • Investors, on average, believe a state pension will contribute 18.8% of their retirement income

Given the precarious state of the global economy is this a major concern?

The long-term fallout from the financial crisis and the lingering effect of loose monetary policy and austerity measures are yet to be fully understood.

If anything, the value of a state pension is likely to fall rather than rise as governments struggle to control deficits, spiralling debts and the unintended consequences of measures designed to boost economic growth.

Set up for a retirement shortfall

Combined with investors’ over-optimistic expected return on income (9.1%) and short-term investment horizons (3.2 years), it could lay the foundations for future financial problems.

If investors anticipate the state riding to their retirement rescue then they are likely to see a shortfall in their retirement income.

Sleepwalking into a retirement crisis

While most developed nations currently offer a healthy state pension, the future is less certain, unless the global economy stages a dramatic recovery and governments are able to raise taxes.



Schroders Global Investor Study 2016 reveals that investors are potentially sleepwalking into a financial crisis later in life.

With the average retirement age rising, pension deficits expanding, and the global economy struggling to recover from the credit crisis, it is clear the writing is on the wall: investors need to be doing more now for themselves and relying less on the state.

For the full story and interactive infographic visit or download the full report below.


  • Global
  • Global investment trends survey
  • Global Investor Study - Investment Outcomes

Important Information: The views and opinions contained herein are those of Schroders’ Investment team, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change.  UK: Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA, is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored. Further information about Schroders can be found at US: Schroder Investment Management North America Inc. is an indirect wholly owned subsidiary of Schroders plc, a SEC registered investment adviser and is registered in Canada in the capacity of Portfolio Manager with the Securities Commission in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan providing asset management products and services to clients in Canada. 875 Third Avenue, New York, NY, 10022, (212) 641-3800.