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NEWS - 8. March 2016 13:35

SEB survey: Residents of Estonia are better prepared for retirement than their Baltic neighbours

The Baltic Retirement Readiness Index, compiled on the basis of a survey conducted by SEB and TNS, revealed that the residents of Estonia are better prepared for retirement than their Baltic neighbours and trust the pension system; however, they do not believe that it is sustainable. In Estonia, slightly more than a quarter of people are saving for their pension at least to some extent, while more than half of the respondents feel that it is something they need to do.

In Estonia, the Retirement Readiness Index was 37 on a 100-point scale; in Latvia and Lithuania it was 33 and 29, respectively. While the retirement readiness of the residents of Estonia has risen a bit when compared to last year, attitudes towards the current pension system are far from positive – more than 70% of the respondents do not believe in its sustainability and only 29% find that the state is going to ensure them an adequate pension. Increasingly realistic views on their future pension were expressed by young people between the ages of 30–39, who think that the state pension and the second pension pillar combined will provide them with 47% of their pre-retirement income.

According to Indrek Holst, Chairman of the Management Board of SEB Elu- ja Pensionikindlustus, forecasts show that the state pension together with the II pension pillar will ensure, on average, 40% of the income earned before retirement, while the expected pension, according to the survey, is on average up to 90% of the income earned before retirement. There is a huge divide between the desired pension and reality. The survey did show that more than one half (56%) of the respondents believe that it is wise to save for their pension, and 27% say that they are doing so to some extent. However, only 14% are saving on a regular basis, contributing an average of EUR 100 monthly to their III pillar pension fund or savings account,” said Holst.

People count on alternatives for retirement age

Many of the respondents still believe that they will have accumulated the savings they need by the time they reach retirement age, even if they don’t have the savings right now. One of the alternatives mentioned to make ends meet was to keep working after retirement age, receiving financial support from children or selling their home and moving in with relatives. Out of working-age people, 28% would want their employer to help support them in securing their retirement by making payments into the employee’s III pension pillar, i.e. employer’s pension.

“People feel the need to secure their finances for retirement age; however, due to a number of different reasons, specific decisions are put off until the future. So it is that people often do not begin to think about financing their pension until their 50th birthday. By then it is too late, as they should have started saving much earlier,” added Holst.

The Baltic Retirement Readiness Index describes the retirement readiness of the residents of Estonia, Latvia and Lithuania using four main parameters: awareness of pension-related matters, trust in the pension system, people’s actual behaviour in saving for pension and their sense of security in their future pension.

For the second consecutive year SEB conducted the retirement readiness survey in cooperation with the market research company TNS. The survey took place in October 2015, in all three Baltic States, with a total of 1700 participants.

A concise report on the survey is available on SEB’s web page.

 


For more information:
Maarja Gavronski
Project Manager for Communication
Marketing and Communications Division
SEB Pank

Phone +372 665 5270
Mobile +372 5656 5785
Address Tornimäe 2, 15010 Tallinn
E-mail
www.seb.ee

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