Page 1: Introduction
In order to enjoy a comfortable retirement, individuals need to take responsibility for their future. Creating a pension should not be delayed as there may not be time to save enough to maintain a good standard of living. It is important that young people understand what is involved in taking out a pension when they start work - planning their pension gives them more security over their working life and beyond. This case study outlines why it is important to take out a pension and details the main types of pension which are available. It examines how Eagle Star has launched a radical new pension, specifically designed to meet consumer needs in today’s market place.
A European problem
The number of old people in Europe is greater than ever before. This has created certain financial difficulties in supporting this section of the population throughout their retirement. Until recently, there was a relatively large proportion of people of working age who could support the older generation. However, this is no longer the case. For example, the proportion of over-60s in Germany is currently 20%. By the year 2030, it will be over a third. A recent UK government report, ‘The Elderly of the Future’ revealed that, in 35 years time, assuming a pensionable age of 60, there will be just 100 people working to sustain benefits for 80 pensioners.
Throughout the Western world, a similar demographic trend is forcing governments to re-think pension strategies. The International Labour Organisation has warned that government spending on pensions and healthcare for the elderly will become the largest budget item for most industrialised countries during the next ten years. By 2055 in Europe, there could be 1 dependant to every 1.5 members of the working population. In this country, the Government is actively encouraging people to take greater control over their pension planning. As a result, the shift from state to private pensions will accelerate.