The Schroders Global Investor Study 2016: Saving for pensions at the forefront of investors’ minds but are they too reliant on the state?
The Schroders Global Investor Study 2016, which surveyed 20,000 end investors in 28 countries, found that respondents identify supplementing pension as the leading reason to invest and recognise they could live for over two decades (21.2 years on average) after they retire, but relatively few understand the financial commitment this represents. The results found that investors’ are reliant on the state and have unrealistic income return expectations in growing their pension savings by investing.
Unrealistic return expectations
The highest priority for global investors is saving for their retirement; 45% said the main reason they invest is to supplement their pensions. The results showed that investors’ expect to grow their pension savings using three main sources; the state pension (will contribute an average of 19%), their company pension scheme (will contribute an average of 18%) and their own savings and investments (will contribute an average of 21%).
However, the survey also found that investors are over-optimistic about income returns; wanting a minimum of 9.1% per year and that they have a short-term investment horizon (3.2 years), when a minimum of 5 years is usually recommended. This unrealistic expectation could lead to a pension shortfall, as investing will play an important role in growing their retirement savings.
Over-reliance on the state
A further concern that the survey highlighted was that investors may be too reliant on the state. The study found investors believe a state pension will contribute 19% of their retirement income. If investors anticipate the state heavily supplementing their retirement and have unrealistic expectations around income, then they are likely to see a shortfall in their retirement savings.
Lesley-Ann Morgan, Global Head of Defined Contribution at Schroders, said:
“With people spending longer in retirement, the emergence of personal retirement funding gaps, governments struggling to balance their books and the global economy slowly recovering from the credit crisis, it may be that investors need to be doing more now for themselves and rely less on the state.”
“Furthermore, in the current low interest rate environment investors’ return projections are extremely high. In order to plan for retirement and reduce their personal funding shortfall and over dependence on the state, we encourage investors that now is a critical time to consider their investment needs to plan for retirement. Speaking to their financial adviser will help them align their risk adjusted return profile in light of current market conditions, to meet their financial goals, such as saving for their pension.”
For more information on the survey results please visit www.schroders.com/gis.
To discuss the findings of the study in more detail with Lesley-Ann Morgan, Global Head of Defined Contribution, please contact a member of the Schroders PR team.
For further information, please contact:
Sarah Deutscher Tel: +44 (0)20 7658 6139/ firstname.lastname@example.org
Lucy Cotter Tel: +44 (0)20 7658 3365/ email@example.com
Notes to Editors
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About the Schroders Global Investor Study 2016
Schroders commissioned Research Plus Ltd to conduct, between 30 March and 25 April 2016, an independent online study of 20,000 investors in 28 countries around the world, including Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US. This research defines ‘investors’ as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last five years. These individuals represent the views of investors in each country included in the study.
Schroders is a global asset management company with £324.9 billion (€409.7 billion/US$466.9 billion) under management as at 31 March 2016. Our clients are major financial institutions including pension funds, banks and insurance companies, local and public authorities, governments, charities, high net worth individuals and retail investors.
With one of the largest networks of offices of any dedicated asset management company, we operate from 38 offices in 28 countries across Europe, the Americas, Asia, Middle East and Africa. Schroders has developed under stable ownership for over 200 years and long-term thinking governs our approach to investing, building client relationships and growing our business.
Further information about Schroders can be found at www.schroders.com.
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