The role of workplace and private pensions is growing across the world.
In Italy, reforms are already underway that mean the generous first pillar state pension will not remain the same forever. This means individuals will carry greater responsibility for funding their retirement in future via second pillar pensions.
To understand how well prepared people are for their retirement, and how this compares across countries with different pension systems, we conducted a survey to get the thoughts of people both pre and post retirement.
In this report we take a look at Italian workers’ attitudes as they approach retirement, and how they feel once they have entered retirement.
Here’s a preview of a few of the findings:
Heavy reliance on the state pension
Most retired Italians rely solely on the state pension for their retirement. Only one quarter of respondents have other sources of income in retirement – 20% have income from defined contribution (DC) company pension schemes and just 5% have a source of income from a private pension.
This is quite a unique position when compared to the other countries in our survey that have mature DC pension systems – a much greater percentage of Italians are reliant on just the state pension.
Retirees are missing out on their ‘golden years’
According to our survey, retirees in Italy are also the least happy when it comes to being able to afford the lifestyle they want in retirement. Almost 50% of retired respondents stated they are unhappy with this aspect of retirement, the highest out of the eight countries we looked at (note that due to rounding, percentages in the below chart may not sum to 100).
Strong financial support for the family
When asked what working Italians thought would be their biggest expenditure in retirement, a family-oriented culture came top of the list. This was confirmed by retirees, with 47% of recent retirees and 55% of those later in retirement using their retirement savings to help children and grandchildren financially.
Whilst this appears wholly positive, it can also lead to people not taking ownership of their financial preparation for retirement. The family safety net is important from a cultural perspective but could it result in younger people not engaging with their private savings?
What does this mean for sponsors, schemes and the wider industry in helping members to achieve better retirement outcomes?