General pension awareness of Estonian residents is on the decline

When compared to previous years, the general pension awareness of Estonian residents is on the decline, reveals the SEB Retirement Readiness survey.

The SEB Retirement Readiness survey revealed that 74 per cent of Estonian residents are not aware of how much of the taxes they pay go to the pension pillars securing their future. Only 16 per cent of them say that they know the volume of assets in their 2nd pension pillar and half of the residents know which strategy is used by the 2nd pillar pension fund for pension savings. The pension awareness level actually fell by 3 percentage points to 37 per cent over the year.

“It was expected from the results of this year’s retirement readiness survey that Estonia would be catching up with the developed European countries from the perspective of pension awareness and readiness for retirement age. Unfortunately the situation is the opposite. People start thinking about saving for pension and making tangible steps towards it at an increasingly late hour. If in Estonia the general pension awareness score is 37 points out of 100 and the behavioural index of retirement readiness is 31, then in Denmark, where a similar retirement readiness survey was conducted, awareness is more than twice as high at 80 points and also the retirement readiness is higher than ours at 56 points,” explains Indrek Holst, Chairman of SEB Elu- ja Pensionikindlustus the relationship between financial awareness and behaviour.

There is a huge divide between the desired pension and reality

The survey reveals that residents of Estonia are not concerned with their income during retirement age. One in five future pensioners has queried about the size of their future pension. The general awareness about income during retirement age and interest in it is particularly low in the 30–35 age group. Only 9 per cent of them have looked up the size of their future pension. Limited knowledge is one of the reasons why expectations of Estonians towards income during retirement are not realistic and overestimated.

According to Indrek Holst, Chairman of the Management Board of SEB Elu- ja Pensionikindlustus, the huge divide between the desired pension and reality may escalate into a bigger social issue in the future. Forecasts show that the state pension together with the 2nd pension pillar will ensure, on average, 40 per cent of the income earned before retirement, while the expected pension, according to the survey, is on average up to 90 per cent of the income earned before retirement. Young people and people over 50 have the highest pension expectations. Residents aged 40–50 have slightly lower expectations for pension, but they are still twice the estimated amounts.

The social experiment “Life in the Shoes of a Pensioner” helps to raise awareness

To highlight the difficulties related to the sudden loss of income in retirement age and to direct the public’s attention to the problems related to the decline of income, on 5 April SEB Elu- ja pensionikindlustus initiated the experiment “Life in the Shoes of a Pensioner”. Within the framework of the experiment, representatives from three generations are trying to live off of an Estonian pension for one month. You can watch and read about what life on a pension is like here: http://www.seb.ee/pensionivalmidus. From today, the bloggers’ outcomes for the first week have been displayed in the environment.

Additional information:

Julia Piilmann
Communications manager
Marketing and Communications Division
SEB Pank

Phone +372 665 5340
Address Tornimäe 2, 15010 Tallinn
E-mail julia.piilmann@seb.ee
www.seb.ee

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