Pension Savings: The Real Return - 2018 Edition

Better Finance Research Papers Series, 2018

500 Pages Posted: 1 Jul 2019

See all articles by Ján Šebo

Ján Šebo

Faculty of Economics at Matej Bel University

Ştefan Dragoş Voicu

Better Finance

Carsten Andersen

Danish Insurance Institute

Aleksandra Mączyńska

Better Finance

Didier Davydoff

European Savings Institute (OEE)

Lorenzo Marchionni

Better Finance

Marissa Diaz

affiliation not provided to SSRN

Michal Mešťan

Faculty of Economics Matej Bel University in Banska Bystrica

Lubomir Christoff

ICFC; Institute of Certified Financial Consultants

Edin Mujagić

Tilburg University

Gabaut Laetitia

European Savings Institute (OEE)

Grégoire Naacke

European Savings Institute (Observatoire de l'Épargne Européenne)

Johannes Hagen

Jönköping University

Guillaume Prache

Independent

Fernando Herrero

affiliation not provided to SSRN

Joanna Rutecka

Warsaw School of Economics (SGH)

Arnaud Houdmont

Better Finance

Lina Strandvåg Nagell

Better Finance

Date Written: October 8, 2018

Abstract

In June 2013, BETTER FINANCE published a research report entitled “Private Pensions: The Real Return” which evaluated the return of private pension products after charges, after inflation (“real” returns) and – where possible – after taxation. This first report furthermore identified the factors affecting these returns in Denmark, France and Spain, including an indepth description of the pension savings vehicles available in these countries.

In September 2014, BETTER FINANCE published the 2014 edition of the "Pension Savings: The Real Return" research report, which included data updates for the three countries covered in the initial study, as well as new in-depth evaluations of pension savings for five new countries: Belgium, Germany, Italy, Poland and the United Kingdom.

The 2015 edition of the BETTER FINANCE research report was aimed at updating the existing country cases and expanding the coverage to 15 European Union countries with the addition of Bulgaria, Estonia, Latvia, the Netherlands, Romania, Sweden and Slovakia. With the inclusion of these countries the research report reached a coverage of approximately 85% of the EU population.

The 2016, 2017 and 2018 editions are updates of the 15 existing country cases, with this year’s edition also expanding the geographic scope to include Lithuania. The report is based on the most recent data available at the time of print and includes a wider range of available pension vehicles with the aim of encompassing all financial savings products actually used by EU citizens to save for retirement. Furthermore, overviews on recent trends in the respective long-term savings and pension markets are provided.

The entire series of research reports has illustrated over the years that real returns of retirement savings have been, and still are on average, very low once charges, inflation and taxes have been taken into account. Measuring the impact of all these elements (inflation, charges and taxes) is especially important in a low interest rate environment because the real return for savers can be substantially negative. Since a comprehensive approach to provide this indispensable information to savers is not provided for the time being by Public Authorities or other independent bodies, this research report aims to improve transparency on the real returns of long-term and pension savings in Europe. This is in line with the European Commission’s current “Action” to improve the transparency of performance and fees in this area (as part of its Capital Markets Union – CMU - Action Plan). This CMU Action was proposed by BETTER FINANCE in 2015.

Keywords: Pension Savings, Real Returns, Cross Country Analysis, Retirement System, Performance, Costs

JEL Classification: G19, J26, J32

Suggested Citation

Šebo, Ján and Voicu, Ştefan Dragoş and Andersen, Carsten and Mączyńska, Aleksandra and Davydoff, Didier and Marchionni, Lorenzo and Diaz, Marissa and Mešťan, Michal and Christoff, Lubomir and Mujagić, Edin and Laetitia, Gabaut and Naacke, Grégoire and Hagen, Johannes and Prache, Guillaume and Herrero, Fernando and Rutecka, Joanna and Houdmont, Arnaud and Nagell, Lina Strandvåg, Pension Savings: The Real Return - 2018 Edition (October 8, 2018). Better Finance Research Papers Series, 2018. Available at SSRN: https://ssrn.com/abstract=3412215

Ján Šebo

Faculty of Economics at Matej Bel University ( email )

Tajovského 10
Banská Bystrica, 974 01
Slovakia

Ştefan Dragoş Voicu

Better Finance ( email )

Rue du Lombard 76
Brussels, 1000
Belgium

Carsten Andersen

Danish Insurance Institute

Denmark

Aleksandra Mączyńska

Better Finance ( email )

Rue du Lombard 76
Brussels, 1000
Belgium

Didier Davydoff

European Savings Institute (OEE) ( email )

48 rue de Provence
Paris, 75009
France

Lorenzo Marchionni

Better Finance ( email )

Rue du Lombard 76
Brussels, 1000
Belgium

Marissa Diaz

affiliation not provided to SSRN

Michal Mešťan (Contact Author)

Faculty of Economics Matej Bel University in Banska Bystrica ( email )

Tajovskeho 10
Banska Bystrica, 97590
Slovakia

Lubomir Christoff

ICFC ( email )

3422 Old Capitol Trail
Suite 1063
Sofia, FL 1142
Bulgaria

HOME PAGE: http://idfk.org

Institute of Certified Financial Consultants ( email )

3422 Old Capitol Trail
Suite 1063
Sofia, FL 1142
Bulgaria

HOME PAGE: http://idfk.org

Edin Mujagić

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

Gabaut Laetitia

European Savings Institute (OEE) ( email )

48 rue de Provence
Paris, 75009
France

Grégoire Naacke

European Savings Institute (Observatoire de l'Épargne Européenne) ( email )

Johannes Hagen

Jönköping University ( email )

Gjuterigatan 5
Jönköping, 553 18
Sweden

HOME PAGE: http://www.johanneshagen.com

Guillaume Prache

Independent ( email )

No Address Available

Fernando Herrero

affiliation not provided to SSRN

Joanna Rutecka

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Arnaud Houdmont

Better Finance ( email )

Rue du Lombard 76
Brussels, 1000
Belgium

Lina Strandvåg Nagell

Better Finance ( email )

Rue du Lombard 76
Brussels, 1000
Belgium

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