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New research by Alight Solutions, a leading cloud-based provider of integrated digital human capital and business solutions, in collaboration with the University of Granada, has found that one in four workers (27%) across Europe have little confidence that they will receive a pension when they retire. In addition, almost two-thirds believe that their pensions will not be enough, forcing a drop in their standard of living. These findings are based on Alight’s Retirement Perception Index which was carried out amongst 2,400 employees in companies across multiple sectors from the United Kingdom (UK), Germany, France, Italy, Spain, and the Netherlands.
The index brings to light the state of retirement perceptions in the region and focuses on employees’ trust in their state pension systems and their interest in additional support for retirement planning. This is a topic that is growing in importance and relevance as we observe the greying of Europe, where older persons aged over 60 are expected to account for 35 per cent of the population in the region by 2050.
Most European workers, especially Gen Zs, lack confidence and understanding of their state pensions system
All workers want to know that their hard-earned pension pots will be ready for them when they retire, but few believe that will become a reality. The lack of confidence in receiving state pensions fared highest in Italy (38%), followed by Germany (32%) and Spain (30%), the UK (25%) and France (24%). Dutch employees show the highest confidence, but this also stems from them having the best understanding of their pension systems.
However, the research found that the confidence levels differ in the region depending on factors such as generation and gender. Boomers (born between 1946 and 1964) have the highest confidence in national pension systems, likely due to their proximity to the retirement date. For Generation Z (born after 1996), the uncertainty is much greater, which helps explain why they have the lowest level of confidence amongst all generations. Across gender, men record higher mean values across all aspects in the index, suggesting that men have more confidence in the national pension systems and are more interested in employer-sponsored pension plans than women.
Workers are calling for more advice and added retirement support
Workers in Europe are looking to their employer for help and advice when it comes to pensions. Over half know they need to make additional contributions, but they either cannot afford it or do not know where to invest. 52% of respondents indicated that they would be interested in working for companies that can offer them professional advice on how to better manage their pension plans.
UK employees are the most interested in employer-provided retirement contributions and advice on managing retirement savings. This comes as no surprise considering 47% of respondents already receive additional retirement contributions from their company.
Results indicate that less than a third of UK respondents (29%) believe they will have enough pension funds available to maintain a satisfactory standard of living at time of retirement. However, this isn’t the only aspect that may raise concerns. Half of those surveyed (50%) say they won’t be able to retire until after 66, the age when people can start claiming State Pension in the UK.
“Our economic landscape and workforces are constantly changing, and so should our approach in providing a modern employee experience that covers all needs. As our population ages, employers cannot do without a defined benefit plan that spotlights pension support. It goes a long way in helping workers save time and money, invest, and plan smarter,” says Luca Saracino, International Growth Leader at Alight International. “Design the right, inclusive policies and provide updated information and savvy tools that gives your people the confidence to retire. Such initiatives will not only attract and retain talent, but also reinforce the importance of retirement planning.”
Research methodology
The Alight Retirement Perception Index, conducted between February and March 2022 in collaboration with the University of Granada, measures employees' perceptions about retirement on three fronts/across three areas: trust in the national pension system, current interest in pension plans, and future interest in pension plans.
A total of 2,409 European employees participated in the study, with an almost equitable distribution between males and females, and between the six European countries: Germany, the United Kingdom, France, Italy, Spain and the Netherlands.
About Alight Solutions
Alight Inc. (NYSE: ALIT), a leading cloud-based human capital technology and services provider
About the University of Granada
The University of Granada is a public university situated in the historical city of Granada, which lies 35 km from the spectacular Sierra Nevada mountain range and 65 km from the tropical Mediterranean coast. It was founded by the Emperor Charles V in the year 1531 and is one of the most significant universities in Europe in terms of its historical importance. The university also has campuses in the cities of Ceuta and Melilla in Northern Africa, making it the only European university with campuses on two continents.
In the Shanghai Academic Ranking of World Universities (ARWU), the most prestigious and influential international ranking of its kind, the UGR has consistently improved its position over the last ten years, rising a total of 200 positions. It now occupies its highest position ever since the ARWU was launched and is ranked among the top 300 universities in the world (ARWU 2016). Furthermore, the UGR is ranked second in Spain in the ARWU 2016.