How do people in Germany, France, Italy and Spain think about satisfaction with their life and financial planning? The Allianz study examines personal life aims in the different countries and identifies commonalities and differences.

1. People
in Germany,
France, Italy
and Spain.
Life Aims II, 2005.

2. Index.
Editorial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
About the Life Aims II study. . . . . . . . . . . . . . . . . . . . . 4
1 Background information on the countries
in the study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Demographic development. . . . . . . . . . . . . . . . . . 5
1.2 Economic situation. . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Social security systems and reforms. . . . . . . . . . . 9
1.4 Media and public opinion. . . . . . . . . . . . . . . . . . . . 12
2 Results – Comparison of countries. . . . . . . . . . . . 13
2.1 Life aims: Savoir vivre or a good education. . . . . 13
2.2 Satisfaction with life: Spaniards lead the field. . . 14
2.3 Long-term financial planning and
personal provision. . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Expectations of financial service providers. . . . . . 17
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3 Results – The situation in Germany. . . . . . . . . . . . 20
3.1 Life aims: Good education most frequently cited
life aim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Satisfaction with life: Satisfaction depends on
achieving life aims. . . . . . . . . . . . . . . . . . . . . . . . . 23
3.3 Long-term financial planning and personal
provision: in their infancy. . . . . . . . . . . . . . . . . . . 25
3.4 Expectations of financial service providers: Trust
rather than competence? Trust and competence! 26
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4 Results – Specific demographic groups in
Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1 Young adults (18 –25 years). . . . . . . . . . . . . . . . . . 27
4.2 From people starting a family to the
“sandwich generation”. . . . . . . . . . . . . . . . . . . . . . 29
4.3 50-plus generation. . . . . . . . . . . . . . . . . . . . . . . . . 31
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
I Study objectives and methodology. . . . . . . . . . . . 33
I.1 Methodological approach. . . . . . . . . . . . . . . . . . . 33
I.2 Rating scale used. . . . . . . . . . . . . . . . . . . . . . . . . . 34
I.3 Type of analysis used. . . . . . . . . . . . . . . . . . . . . . . 34
II Macro-economic data for the four countries
Germany, France, Italy and Spain. . . . . . . . . . . . . 36
II.1 Demographic development. . . . . . . . . . . . . . . . . . 36
II.2 Economic situation. . . . . . . . . . . . . . . . . . . . . . . . . 36
II.3 Social security systems: Organization of
pension systems. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
III Survey results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Imprint. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

3. Life Aims II, 2005: Editorial.
Editorial.
Dear Readers, This new Life Aims study is a continuation
of our research first embarked upon when
As we grow up, each and every one of us Allianz carried out its first study of the life
develops life aims which influence how we aims of people in Germany in 2004. This
live our lives. These may change a little over time we have cast the net wider to take in
time, depending on what turns life takes, the views of people living in a further three
but as a rule they are a stable framework European countries. Thus our study has
which we depend on to guide us through become more international, and the result-
life. This study explores these life aims and ing comparisons have been illuminating.
how people feel about them at this moment In addition, the methodology of the study
in time. has been honed so that we are left with a
detailed snapshot which reveals the deep-
Germany, Italy, France and Spain have rich seated opinions, desires and hopes of people
and diverse cultures, so it was no surprise in our core European markets.
when the survey showed that the four popu-
lations have different opinions regarding The findings contain an important message
which life aims are most important. Yet, this to policymakers. They must continue to
study shows something else. The countries encourage people to take responsibility for
are all linked by one common denominator; setting up their own personal provision
respondents in all four said that achieving plans for the future. Policymakers must also
the life aim of being financially well pro- give people the necessary financial freedom
vided for in old age makes them feel most to do this so that they can build up a supple-
uneasy. If they analyze how satisfied they mentary pension secured by capital stock.
are with their lives right now, they recog- The baby-boomers of the late fifties and
nize that they have not yet done enough to sixties have little time before they reach
achieve this aim, and it is becoming more retirement age.
and more evident to them that it will remain
unachievable if they rely on the state pen- To achieve the life aim of “financial indepen-
sion alone. dence in old age”, people need and are seek-
ing professional advice and help. Allianz has
Nowadays, the reasons for this are well always seen itself as a business partner
known. Birth rates have been falling for which helps its customers to solve their
many years and medical advances have led financial dilemmas efficiently. As this study
to increased life expectancy. Consequently, shows, the challenges have become bigger
the state pension systems in their current and not smaller. This motivates us even
pay-as-you-go form, funding expenditure further to listen to our customers attentively
from current contributions, are being sub- and wherever possible to offer them a com-
jected to a test of strength. Clearly, they prehensive solution which is transparent and
cannot pass this test. The writing is on the flexible enough to adapt as people’s situa-
wall – reform is inevitable. tions change.
Best regards,
Michael Diekmann
CEO of Allianz AG
3

4. Life Aims II, 2005: About the Life Aims II study.
About the Life Aims II study.
• Whether the intensive discussion about
old-age provision in the German political
Does money make people happy? What is the link
arena and in the German media has led
between long-term financial planning, personal to greater changes in the knowledge and
provision and life aims? attitudes of people there than in the other
three countries.
• Whether the shift in attitudes which seemed
to have begun when Life Aims I was carried
Allianz conducted the Life Aims II study to out has also led to changed behavior con-
discover to what extent people living in cerning personal provision, and if not, why
Germany, France, Italy and Spain believe not.
that satisfaction with life, life aims and • Whether these developments have also
financial planning are interlinked. What resulted in changed expectations of financial
kinds of life aims have the greatest effect on service providers, and if so, what the expec-
how satisfied people are? What importance tations are.
do people attach to achieving particular life
aims and how likely do they think it is that Our analysis of the study brought to light a
they will achieve those aims? And what role whole range of intriguing differences, not
does their financial situation play in all of only between people living in different coun-
this? Allianz commissioned Nuremberg tries, but also between those in different age
market research institute GfK to design and groups or at different stages of their lives.
carry out the study. For example, people with young families are
the most satisfied with lives, although they
The first Allianz Life Aims study, published generally have little disposable income.
in January 2004, polled only people living However, when we look carefully at this
in Germany. By contrast, the Life Aims II group we can see that the extent to which
survey, conducted between June and August they have planned their finances has clearly
2005, included a further 1,000 people in influenced the extent to which they have
each of the countries France, Italy and been able to achieve their life aims and by
Spain. default also affected how satisfied they are
(more analysis of the results from Chapter 2
We wanted to know: onward).
• How prepared people in these four countries
are for a demographic change which is set to This document summarizes and presents
push the current pay-as-you-go financed the most important results in the chapters
social security system to its limits. entitled “Results – Comparison of countries”,
• What people think about the reforms which “Results – Germany”, and „Results – Specific
are necessary and about the changes to how target groups”. The special chapter entitled
responsibility for social welfare is divided „Background information on the countries
between the state and themselves. in the study” contains a brief synopsis by
Allianz economists of the demographic,
economic, political and media climates of
the four countries where the survey was
carried out. Further information on this can
be found in the Appendix and at
www.allianz.com/lifeaims.
4

5. Life Aims II, 2005: Background information on the countries in the study.
1 Background
information on the countries
in the study.
More than ever before, the lives of people in
the countries where the study was carried
out are influenced by the changing socio-eco- The populations of the four European countries
nomic landscape. The demographic change Germany, Italy, France and Spain will age dramatically
due to take place over the next few decades and shrink in the next few years. The countries most
will upset the delicate balance between the affected by this are Italy and Germany, with Spain
number of people in gainful employment following suit somewhat later. In all four countries,
and the number of those receiving pensions. the demographic change will create an intolerable
At the same time, the difficult economic sit-
burden on social security systems which are currently
uation is reducing the scope available to pol-
funded primarily from current contributions on a
icymakers to implement sustainable reform
of the social security systems. In this period pay-as-you-go basis.
of rapid change, the media pay a key role in
disseminating information.
ed to more than six. In Germany the popula-
In order to get a better picture of how tion pyramid is currently very similar, but
crucial an influence socio-economic factors its population will age less quickly than that
actually are, we analyzed the current of Italy; in 2050 there will be five retired
situation in all four countries. persons for every ten in gainful employment.
1.1 Demographic development. Table 1: Dependency ratio today and in 2050:
Number of over-65s per 100 persons aged
The best measure of demographic develop- between 15 and 64.
ment is known as the dependency ratio,
2005 2050
which is defined as the number of people
aged over 65 divided by the number of Germany 28.5 51.0
employable people aged between 15 and 64.
France 25.0 51.4
In all four countries, this ratio will deterio-
rate considerably. While there are currently Italy 29.7 63.2
still more than three people in gainful
Spain 24.5 55.1
employment for every person in retirement
in Germany and Italy and indeed four in Source: National statistics offices
France and Spain, in all four countries this
ratio will fall to less than two people in The current population pyramids of Spain
employment for every person in retirement and France are slightly less top heavy, as
by 2050 (see Table 1). both countries have dependency ratios of
approximately 25 percent. However, the
However, the extent to which the countries demographic change will also cause these to
will be affected by these changes varies. Italy rise considerably. Spain in particular will
will be the vanguard of ageing populations. experience considerable change. In 2050,
While today there are only three persons in Spain’s population will be one of the oldest,
retirement for every ten persons in gainful second only to Italy. By contrast, population
employment, by 2050 this will have increas- aging will be slightly less dramatic in France,
5

6. where the dependency ratio in 2050 is likely demographic change makes it impossible for
to be similar to that of Germany. pension policymakers to continue “business
as usual”.
In all four countries, increasing longevity
and a fall in birth rates are the principal rea- Table 3: Birth rates in 1965 and today.
sons for the predicted demographic age shift.
1965 Today
Life expectancy at birth is around 77 years
for males and 84 years for females in all the Germany 2.5 1.4
countries, which means that in the last 40
Italy 2.7 1.3
years life expectancy has risen by about ten
years (see Table 2). This trend is expected France 2.8 1.9
to continue in the next few years, indeed
Spain 2.9 1.2
demographers expect life expectancy to
increase by a further four years in the next Source: National statistics offices
30 years.
1.2 Economic situation.
Table 2: Life expectancy of males and females
at birth (years). Germany.
In the last ten years, Germany’s economy
1960 Today
has grown markedly more slowly than those
Males Females Males Females of its European neighbors, with annual Gross
Domestic Product (GDP) growth regularly
Germany 66.9 72.4 75.6 81.3
below the European average since 1995.
France 66.9 73.6 76.7 83.8 There are many reasons for this weak
growth: German reunification, the loss of
Italy 67.2 72.3 77.8 83.7
competitive advantage on the international
Spain 67.4 72.2 77.7 84.0 market as a result of excessive wage rises in
Source: National statistics offices the early nineties, and a somewhat inflexible
labor market.
However, the fall in birth rates has been
even steeper than the increase in life Nevertheless, the extremely unfavorable
expectancy. While 40 years ago the average economic situation Germany has suffered
number of children per woman was well since 2002 detracts from some important
above the figure of 2.1 needed to maintain positive changes which have taken place in
the population level, birth rates in all four Germany. Many companies have hugely
countries have now fallen below that. Ger- increased their competitiveness, a develop-
many, Italy and Spain have very similar birth ment reflected in the fact that Germany now
rates of between 1.2 and 1.4 children per exports more than any other country in the
woman, but in France the birth rate is quite world. Restructuring and consolidation have
a lot higher at 1.9 (see Table 3). driven down costs and increased profits. The
negative effect of this unfavorable situation,
Thus the demographic pressure on social however, is that private consumption is
security systems is high in all of the coun- weak. This, coupled with the structural
tries. Forecasts of how the age structure will crisis in the construction industry, continues
develop based on life expectancy and birth to hold back domestic demand.
rates are relatively precise. If anything, the
speed of medical progress and the accompa- Due to this weak domestic demand, lower-
nying increase in life expectancy has been ing the unemployment rate which currently
underestimated up to now. And even if birth stands at 11.2 percent will be a slow process.
rates recovered, the effects of this would not If we apply the rule of thumb that growth
be felt immediately, as many years would of over one percent is needed to create
pass before the “extra children” reached additional jobs, then regular employment
working age. It is thus quite clear that the will increase only gradually.
6

7. Life Aims II, 2005: Background information on the countries in the study.
Public finances are already stretched, and
further belt-tightening is necessary if
Germany is to conform to the Maastricht Economic growth in Germany, France and Italy has
criteria. Quite rightly, consolidating public been unsatisfactory in recent years, and as there is no
finances is seen as an important goal of the indication that this trend will be reversed. Receipts
new government. from social insurance contributions will continue to
be to be insufficient, making reform of the social
In the coming years it seems extremely likely security system even more inevitable. At the same
that the economic situation will improve.
time, however, the disposable incomes of private
However, it is important to realize that
households will rise only marginally, so that as far as
miracles do not happen overnight; annual
GDP growth of 1 to 2 percent seems realistic their finances are concerned, many people will be
in the medium term. extremely limited. The positive exception to this trend
is Spain, which thanks to its balanced public budget is
France. enjoying not only a good economic situation but also
Although the French economy has been on a healthy social security system.
the road to recovery since about mid-2003,
this year’s real rise in GDP is only expected
to be a modest 1.5 percent or thereabouts.
One of France’s main problems is high in labor market policy. Any improvement in
unemployment, which the de Villepin employment brought about by a healthier
government has said will be uppermost on economy is likely to be gradual at best.
its agenda. The number of people in gainful
employment has been stagnating for quite Public finances are another weak point. Last
some time now, and although the unemploy- year the deficit ratio was 3.6 percent, and
ment rate recently fell below the 10 percent this year and next year too it is forecast to
mark, thus appearing less ominous, this be above 3 percent. Thus France is unlikely
seems to have been primarily due to changes to be able to meet the Maastricht criteria
Dr. Michael Heise, thus making them accessible to everyone, what-
Chief Economist of Allianz Group and ever their income bracket.
Dresdner Bank
• Capital-secured nursing care insurance should be
introduced gradually via a mixed model. Supple-
In the next few years the new German government
mentary private care insurance plans secured by
needs to address the task of adapting the social
capital stock would allow a greater range of care
security system to the new demographic reality, so
services to be provided and would also permit
it is good that the issue of increasing the state
social insurance contributions for nursing care to
pension age has already been raised. Together
remain at their current level.
with measures to boost growth by increasing the
productivity and employment rates, this will be
• In health insurance, too, the financial situation
key in helping to lessen the burden on the social
could be stabilized by moving certain blocks of
security system.
services from the sphere of pay-as-you-go
financed health insurance into a capital-covered
However, these stabilization measures will not be
system. Examples of areas which could be
enough. In order to make the German social secu-
removed are dental treatment and dental prosthe-
rity system future-proof, a far greater percentage
ses, accidents which are not work-related and
of old-age provision must be secured by capital
sickness benefit.
stock:
What policymakers must not lose sight of whilst
• As far as capital-secured pensions are concerned it
discussing reform of the social security systems is
is not a question of introducing new products, but
that we are running out of time, because due
far more one of making the existing products more
to our demographic situation we only have some
attractive, making it easier to access state aid and
15 years to build up the necessary capital stock.
7

8. and a balanced budget remains but a future Spain.
dream. The Spanish economy continues to enjoy
strong economic growth significantly above
However, forecasts of economic growth are the EU average. This is primarily driven by
around 2 percent for the next few years, and private demand, as rising wages and low
thus close to the average of the euro area interest rates create an advantageous climate
member countries. for consumption. At the same time, the con-
struction industry is booming, with public
Italy. investment in infrastructure continuing to
In Italy as in Germany, the economy is grow- guarantee full order books.
ing more slowly than the European average.
The manufacturing industry in particular is However, despite a significant rise in the
in crisis. Italy’s traditional export products number of people gainfully employed, the
are suffering from weak sales as the technol- unemployment rate remains relatively high
ogy content of these goods is low and price at 11 percent, and the labor market situation
competition high. is not set to improve in the next few years.
The unemployment rate in Italy thus remains Unlike the other three countries, Spain has
relatively high at 8 percent. Furthermore, managed to achieve a balanced public bud-
as further structural change is expected in get for several years now. The fiscal situation
industry, the number of gainfully employed provides the government with the freedom
persons will tend to increase more gradually to pursue an active expenditure program as
than it has done so far. well as to reform the social security system.
The high level of public debt, which has In the next few years, GDP growth should
soared once more to some 108 percent of continue to remain strong at over 3 percent.
GDP, will also continue to impede any gov-
ernment attempts at implementing policies
which would foster economic growth.
Consequently, growth of only 1 to 1.5 per-
cent can be expected in the near future,
putting Italy below the average of the euro
area member countries.
Andrew Bosomworth, Our social security system is a financial obligation,
PIMCO portfolio manager a form of debt, that is how economists see it. Their
calculation is simple: if the population continues to
If German policymakers try to reduce the country’s age as the age pyramid indicates it will, economic
deficit by raising taxes and reducing expenditure growth remains weak and social insurance expen-
alone, without tackling the causes of the deficit by diture remains at the same high level, debt will
reforming the labor market and reducing red tape, rise further. According Standard & Poor’s and the
they will be making a mistake. Until the employ- World Bank, by 2050, this debt could be 200 per-
ment problem is resolved, the deficit will continue cent of Gross Domestic Product (GDP). Such a
to expand. They need to reverse the order of high level of debt would make German govern-
priority in which they do things by implementing ment bond issues as good as worthless. The Ger-
reforms first and accepting that these will lead to a man pensions authority should include this calcu-
budget deficit. Once reform has taken place, the lation in the letter it sends out to the population
growth which is needed to improve public about how much pension they will receive.
finances will come, just as it did in the United
States and Great Britain at the end of the 1980s.
8

9. Life Aims II, 2005: Background information on the countries in the study.
1.3 Social security systems
and reforms. The demographic change in Germany, France,
Italy and Spain will affect the future stability of pay-
The social security systems of all four coun- as-you-go social security systems, both healthcare
tries are pay-as-you-go systems, meaning
systems and pension systems.
that the contributions of those currently
paying social security contributions are used
to cover current expenditure on pensions,
healthcare and nursing care. prehensive than it was in Germany, so there
was correspondingly less need for people
In all four countries, people are provided to get to grips with personal provision plans.
with a high standard of medical care and a The income threshold for state pensions
comprehensive range of healthcare services. there, for example, is a good 30 percent
However, state healthcare systems will be higher than in Germany, meaning that the
confronted with serious problems in the group of people with higher earning power
future. The demographic change of the next who are above the threshold is much
few decades, the continuing advances in smaller. In Italy, self-employed people are
medical technology, rising prices for health- also covered by the state pension system,
care services and the accompanying rises in whereas in Germany the self-employed are
contribution rates will soon threaten to responsible for their own old-age provision.
overload the state pay-as-you-go systems. In addition, in Italy the transition periods
for the reforms already passed are very long.
Where pensions are concerned, for years It is thus perfectly conceivable that unlike
people living in the four countries included people in Germany, most of the Italian popu-
in the study could be sure that when they lation are not particularly aware of how
retired they would receive a pension which much the reforms will effect their personal
would almost completely secure their stan- situations.
dard of living; on entering retirement they
would receive approximately 70 percent or Germany.
more of their final salary. Pension adjust- The amount of money in the German social
ment was usually in line with the develop- security purse is worrying. In addition to the
ment of wages, so everyone could see people demographic shift, high unemployment and
around them who were older than them- the consequent reduction in the number of
selves continuing to live well and share in gainfully employed persons obligated to pay
economic progress. social insurance contributions are the main
causes of the difficult financial situation. In
As the countries are currently in different order to stabilize the situation, the German
stages of pension reform and have different government has recently implemented two
socio-economic conditions, the awareness quite substantial reforms.
of how necessary it is to make personal
provision for the future varies. In Spain in As part of the pension reform of 2001, the
particular, the fact that the economy is pension formula was adjusted. The effect
currently flourishing is tending to mask of this reform is a long-term reduction in
long-term problems. Since there is also little the average gross state pension level from
discussion on pensions in the political arena 48 percent today to 41 percent in 2030. To
at present, the population still has scant cushion the effect, this adjustment was
knowledge of the problem. accompanied by the introduction of the
Riester pension on January 1, 2002, which
The different historical contexts also lead to provides state subsidies depending on the
different perceptions. In Italy, the social number of family members and the marginal
security system was traditionally more com- tax rate.
9

10. As a result of the 2004 pension reform, the Payments from the two schemes amount to
amount of tax charged on pensions is gradu- approximately 75 percent of the person’s
ally changing, and pensions will eventually final salary. In total, some 51 percent of the
be fully taxable by 2040. At the same time, income in a retired household is from a
subsidies for payments into pension plans state pension, 34 percent is from a company
were introduced. In order to further encour- pension and 15 percent from personal provi-
age people to take out pensions secured by sion. As reforms were implemented fairly
capital stock, the basic pension (Basisrente recently, there are no reforms planned in the
or Rürup Rente) was introduced. Contribu- immediate future.
tions to this are seen as special expenses and
as such are tax deductible. This year the Italy.
maximum amount which can be deducted The state pension system in Italy is also a
from tax is 12,000 EUR, but the figure will compulsory pension scheme financed by
rise to 20,000 EUR in 2025. pay-as-you-go tax contributions, with a state
pension age of 65 for men and 60 for
In Germany there are now numerous old-age women. Anyone who has paid contributions
provision products secured by capital stock. for at least 20 years has the right to draw a
Traditional life insurance products have state pension, although to receive a full pen-
been joined by the Riester pension and the sion the person must have contributed for
basic pension, known as the Rürup pension, 40 years. The amount of pension received
and there are also several ways of organizing depends on how long the person has paid
pensions through companies. However, the social insurance contributions for and when
amount invested in these products is still they began to make those payments. In the
small in comparison to the state pension. future, people who have been contributing
since January 1, 1996 or later will receive
France. not the minimum pension but what is
In France as in Germany, the state pension known as a “retirement allowance”. Cur-
scheme is a compulsory pension scheme rently, the average household of retired
financed by pay-as-you-go tax contributions. persons receives 74 percent of its income
State pension payments are means tested from a state pension, only 1 percent from a
and after 40 years of contributing the company pension and 25 percent from
maximum amount someone can receive is private savings.
50 percent of the income threshold for
contributions assessment. The minimum In Italy, the second and third pillars are
pension is currently 599.94 EUR a month, hardly developed at all. The reforms in
but is only paid to people over 65. Despite recent years, such as gradual raising of the
this state pension age of 65, or 60 if the state pension age and the transition from
person has paid contributions for 40 years, pensions based on final salaries to pensions
the actual average retirement age in 2002 based on the amount of contributions paid
was 58. are leading to a gradual decrease in the
amount of state pension received. However,
France has two company pension schemes, further reform is inevitable. One idea which
ARRCO, which is open to all those in has been on the table for several years now
employment, and AGIRC, which admits is converting compulsory golden handshakes
only those in managerial positions. The (Trattamento a Fine Rapporto) into a pension
amount of pension received is determined product secured by capital stock. However,
by the level of contributions paid, which policymakers appear to be continuing to
is converted into points, and the schemes are hold off implementing this.
financed by contributions from employees
and employers. In 2004, personal savings
plans for old age were introduced. Payments
into these plans are currently tax-free with a
generous upper limit.
10

11. Life Aims II, 2005: Background information on the countries in the study.
Spain. 1.4 Media and public opinion.
In Spain, the state pension accounts for 92
percent of retirement income, while both The media influence people’s attitudes and
company and private pensions are uncom- opinions and are thus taking on a decisive
mon. The state pension age is 65 and the role in the development and continuation of
amount of pension received depends on the modern democracies. A comprehensive
number of years for which the person has range of information from all media sources
contributed and the basis of assessment. enables people from all walks of life to
This is calculated from the income liable to perceive the forces which are at work in
contributions which the person received society.
during the 15 years directly prior to reaching
state pension age. Although it is also pos- Example – Germany.
sible to draw an early pension on reaching In Germany, a strong focus on the issue of
the age of 60, if the person does not draw a pensions both in political debate and in
pension until they have reached the age of the media has raised people’s awareness of
65 and after they have paid contributions for the need to make personal provision for
at least 35 years, they receive an extra retirement. Between 2001 and 2004, for
allowance. example, there was extensive coverage in
the television news of the condition of
Despite indications that the population is the pension system in Germany. There have
aging, in Spain there is currently no debate been times when more than half of what
on implementing reform. Relatively strong was reported about the condition of Ger-
economic growth and a high level of many’s social security system, particularly
immigration are currently concealing the on the television news, concerned the
problems which demographic change will system for old-age provision. This has raised
cause. awareness significantly and the effect has
lasted. (Source: Media Tenor, September
2005).
Dr. Moritz Kraemer, The ideal time for stemming the tide has already
Standard & Poor’s Director (Europe) passed. Thus, in addition to bold reforms of the
healthcare and pension systems and policies
Aging populations inevitably lead to enormous which inject vitality into the labor market, swift
burdens on public budgets. Public expenditure in consolidation of public finances is paramount.
Germany, for example, will have risen by over five Surpluses must be created as quickly as possible
percent of Gross Domestic Product (GDP) by the in order to provide enough financial flexibility to
middle of the century. prevent the country’s economy collapsing.
Hypothetical Sovereign Ratings
If no sufficient measures are implemented to (based on general government balance performance).
change this course of events, for example reform-
ing social security systems and increasing the AAA Assuming no change in
employment rate, then public debt will spiral out AA+ current government fiscal
of control. Public debt in Germany will increase at AA policies. Standard & Poor’s
AA–
breakneck pace as of 2025, when demographic takes a large number of
A+ factors into consideration
pressure starts to become unbearable, and will
A when deriving sovereign
have rocketed to over 220 of GDP by 2050. There
A– credit ratings. In the very
is no avoiding the fact that such a development BBB+ long-term, prolong fiscal
will lead to concern about the country’s credit- BBB imbalances tend to become
worthiness. Its credit ratings will go into free fall BBB– a dominant factor.
and investors will demand higher risk premiums,
causing the budgetary black hole to implode yet 2005 2010 2015 2020 2025 2030 2035
further.
Germany France UK USA
11

12. Media influence on public opinion.
Strong focus on pensions raises awareness
of need for provision.
80% 4 years ago Today 35%
30%
60%
25%
20%
40%
15%
10%
20%
5%
0% 0%
2001 2002 2003 2004 2005
% of media coverage on pensions
Worry: Pensions
Source: Media Tenor /Institute for Election Research,
Politbarometer
Example – Spain.
Since 1996, the proportion of reports on
the subject of pensions in the Spanish media
has increased gradually. The press pays
increased attention to the subject of pen-
sions when it forms part of the agenda for
politicians and economic policymakers.
In particular, new legislation and the reac-
tions from important economic actors
(e.g. Unespa, Bank of Spain) generate reports.
Only a few articles offer background infor-
mation, the majority are news reports. The
majority of Spanish media reports concern
pension plans (PPA – Planes de Pension
Asegurados), very few are about actual
pension products. (Source: Media Tenor,
October 2005).
12

13. Life Aims II, 2005: Results – Comparison of countries.
2 Results – Comparison of
countries.
What life aims do people in these countries
really want to achieve? Who is most satisfied
with life? And who is financially better pre- Our perceptions of countries are cliché-ridden.
pared for the future and old age? We say the French and the Southern Europeans know
how to enjoy life, while the Germans are more
2.1 Life aims: savoir vivre or concerned with the serious things in life. But what are
people in these countries really like?
good qualifications?
For 80 percent of French people surveyed,
“Enjoying life right now” is an important life the extent to which it has been achieved.
aim, coming in only slightly behind the aim Here, there is by far the greatest discrepancy
of “Having my own children”. Thus it is in all four countries.
probably no coincidence that France’s birth
rate of 1.9 children per woman is higher Life aims.
than those of the other three countries and
Having a good education/training. Question 3: Now I’d
the demographic time bomb is not ticking like to mention several
so loudly here. Germany: 88% possible personal life
Germany: 66% aims. Please tell me how
France: 73% important these are to
In Germany and Italy, by contrast, “Having you.
France: 45%
a good education” is the life aim mentioned
Italy: 88% Question 3a: And to
most often. In Spain, this aim is only
Italy: 43% what extent would you
narrowly beaten into first place by the aim say you have been able
Spain: 88%
of “Living healthily”. The economic situation Spain: 46% to achieve this aim so
and job security seem to be the main far?
concern in these three countries, so it is not Living healthily.
surprising that their enjoyment of life is
Germany: 80%
dependent on more tangible life aims such Germany: 72%
as owning their own home or living France: 74%
healthily. France: 60%
Italy: 77%
Although achieving “Financial security for Italy: 68%
the future and old age” ranks third among Spain: 73%
the life aims of people in Germany and thus Spain: 68%
appears to be a greater concern there than
in the other three countries, it is actually Financial security for the future/old age.
deemed to be an important life aim by the Germany: 78%
same percentage of people living in Spain Germany: 34%
(78 percent, fifth place) and by even more France: 73%
people living in Italy (86 percent, fourth France: 32%
place). In France, too, a substantial 73 per- Italy: 86%
Italy: 26%
cent of people believe that financial security
is important, putting it in fourth place. Spain: 78%
Spain: 32%
In all four countries, financial security
ranks first when it comes to the difference
between the importance of a life aim and
13

14. Having my own children. Satisfaction with life.
Germany: 75% Question 1: If you take a look at your life so
Germany: 53%
far, how satisfied are you in general with your
France: 54%
life?
France: 35%
Italy: 77% Germany: 52%
Italy: 42%
France: 42%
Spain: 74%
Spain: 50% Italy: 49%
Enjoying life right now. Spain: 56%
Germany: 75%
Question 1a: As you see it, has your satis-
Germany: 63%
faction with life changed as a whole over the
France: 81%
France: 55%
last five years?
Italy: 81% Germany: 32%
Italy: 59%
France: 32%
Spain: 78%
Spain: 61%
Italy: 44%
All respondents (N = approx. 1,000 each country).
Spain: 47%
Top 2 boxes
All respondents (N = approx. 1,000 each country).
Top 2 boxes
2.2 Satisfaction with life:
Spaniards lead the field. People in France are the least satisfied with
life. Together with the Germans, they
Life aims and, more specifically, their occupy last place when it comes to having
achievement are closely related to satisfac- seen an improvement in their personal
tion with life. The extent to which a life situation in the last five years. However,
aim affects satisfaction, however, depends Germans take second place when it comes
on the type of aim it is. to satisfaction with life so far, just slightly
ahead of Italians.
There are some life aims which are, for
many people, a matter of course, for exam- In all four countries, the most important
ple being in a long-term relationship or source of satisfaction with life is family and
having children. Although achieving these friends, while what makes people most dis-
aims increases satisfaction with life only satisfied are political and economic condi-
marginally, not achieving them leads to dis- tions and financial security for the future
satisfaction. and old age. The overall result concerning
dissatisfaction mirrors that of satisfaction
The opposite is true of the life aims “Finan- with these areas of life: the populations of
cial security for the future and old age”, Spain and Germany are more satisfied with
“Enjoying life right now” and “Career devel- their friends and family than those in Italy
opment”. Achieving these aims has a positive and France, and they are not as dissatisfied
influence on satisfaction. with their financial security.
People living in Spain are more content with
life than those living in the other three
countries, and more of them report an
improvement in their satisfaction in the past
five years.
14

15. Life Aims II, 2005: Interview.
Different countries – different recipes for success?
Observations by Dr. Dennis J. Snower,
President of the Kiel Institute for World Economics
Mr. Snower, the countries where Allianz con- security in planning and do not require
ducted its survey have very diverse social secu- further adjustment five years later on. The
rity systems. In your opinion, which country is sustainable pension reforms initiated in Italy
best prepared for the demographic change? in 1992 and 1995, which will not be fully
complete for another 30 years, are an exam-
That is difficult to say. If you look at the
ple of how such security in planning can be
pension systems, then Germany and Italy are
provided. Nevertheless, such long timescales
currently in the best position to solve demo-
can result in the sense of urgency being
graphic problems. Spain has yet to introduce
forgotten.
sustainable reform and France is also
struggling to do so. The demographic change
How can people themselves prepare for these
will effect healthcare systems in a similar
demographic changes?
way, yet here all four countries are much
less prepared, hardly any of the necessary First of all, they need to realize that in the
groundwork has been done. future they will need to take on much
more responsibility for their social welfare
What causes the greatest difficulty in than they do now, be it regarding old-age
implementing reforms? provision, healthcare or education. They
will have to pay out of their own pockets for
The social security systems are all financed
many of the things which are currently
by contributions, which worked well when
financed completely or primarily by the
economies were flourishing and populations
state. This means that many of those in low
were growing. However, things have
income brackets will have to change their
changed since then; we now have weak
spending habits and the way in which they
economic growth and aging populations, and
provide for their financial futures. Increas-
the social security systems are being pushed
ingly, the consumption desires of today will
to their limits. State benefits which were
collide with the financial provision goals of
once simply the norm need to be reduced
tomorrow.
and replaced through private initiatives.
Politicians, however, find it difficult to
What role do financial service providers play in
renege on their election promises and to
this process?
reduce benefits, which is why reforms are
introduced slowly, late, or half-heartedly. The privatization of benefits once provided
And the fact that the electorate is skeptical by the state demands more effort from people
about these essential reforms makes the to provide for themselves. Financial service
process even harder. providers can help them to do this. While
they may not be able to take over the role of
If there is no way of avoiding reform, then how the state, they are able to provide people
should reforms be introduced? with the financial tools they need to adjust
to the new reality. This means that product
Most importantly, politicians need to be
ranges must be adapted to meet these new
completely upfront with the electorate and
requirements. In addition to long-term sav-
to explain the changes needed to address
ings plans for old age, for example, FSPs will
the demographic problem as clearly as they
have to offer products which address people’s
possibly can. Chopping and changing as we
financial needs during periods of education
have with the various pension reforms intro-
or training, as well as supplementary health
duced in Germany in the past ten years only
insurance schemes. The insurance industry
serves to destroy the confidence of the
needs to offer simple, cost-effective products
electorate completely. Reforms should be
for personal provision which enable all citi-
designed in such a way that they provide
zens to secure their own financial futures,
even if they are in a low income bracket.
15

16. Satisfaction with areas of life. 2.3 Long-term financial planning
Your family, your friends and acquaintances. and personal provision.
Question 2: Now I’m
Germany: 72%
going to list some aspects People in all the countries in the study
of your life. Would you
please tell me how satis-
France: 68% believe that long-term financial planning is
fied you are actually in important, but those in Germany accord it
Italy: 67%
each instance? just a little more importance. None of the
Spain: 79% four countries are role models when it
comes to personal provision, unlike Switzer-
Your health care. land and the Netherlands which succeeded
Germany: 45% in making pensions secured by capital stock
a mainstay of their social security systems
France: 52%
early on (see Table 4). In Germany, however,
Italy: 27% several years of debate in politics and the
media about the Riester pension and the like
Spain: 47%
have not been completely without effect.
Your time for leisure and hobbies.
Table 4: Division of retirement income:
Germany: 45% Proportion of pension income received from
state pay-as-you-go systems and from
France: 40%
pensions secured by capital stock in Switzerland
Italy: 33% and the Netherlands
Spain: 41%
State pay-as-you- Pensions secured
go system by capital stock
Your financial provision for the future/old age.
Switzerland 42 % 58 %
Germany: 28%
Netherlands 50 % 50 %
France: 27%
Germany 85 % 15 %
Italy: 20%
Source: Brugiavini, Aging and Saving in Europe, 2002
Spain: 28%
No less than a third of the German popula-
Economic conditions. tion believe that however long they live they
can look forward to a financially secure
Germany: 15%
old age. In France, only 17 percent of people
France: 2% believe that. Furthermore, a significantly
higher proportion of people living in Ger-
Italy: 18%
many, 35 percent, are satisfied with their
Spain: 22% personal provision than their counterparts in
Italy (16 percent), France (22 percent) and
Political environment. Spain (24 percent).
Germany: 3%
By contrast, people in Spain are most opti-
France: 2%
mistic concerning their personal provision.
Italy: 4%
taly: 39 percent of those who have not yet
achieved their aim of providing for the
Spain: 13%
future and old age believe that they will still
All respondents (N = approx. 1,000 each country).
be able to, while in Germany only 25 per-
Top 2 boxes cent of people believe this (see Table 5).
However, the sobering reality is that in all
four countries, personal provision is in its
infancy and the majority of respondents see
no reason for satisfaction or optimism.
16

17. Life Aims II, 2005: Results – Comparison of countries.
Table 5: Issues concerning longevity – Considering that demographic change is
Comparison of countries. inevitable and the amount of capital cover-
age in social security systems insufficient, it
Long-term financial planning is is obvious that providing benefits will
(very) important.1 become hugely expensive for governments
Germany 62% if there is further hesitation on the subject
of reform. As the first Allianz Life Aims study
France 49% conducted in Germany in 2004 showed,
Italy 54% people significantly underestimate the
extent of personal provision necessary.
Spain 54%
Although people are now aware of the fact
I’m (very) convinced that I will still be able that personal provision is important, they are
to achieve my personal provision aim. 2 still not acting on this knowledge. One rea-
Germany 25 % son is that many of them simply do not have
the financial means to invest in personal
France 23 % provision, and another the fact that neither
Italy 24 % political reforms of the systems nor the
products themselves are transparent enough.
Spain 39 %
In terms of where their priorities lie, how-
However long I live, I have made (very) ever, people are often more concerned with
good provision.3 consumption rather than personal provision.
Germany 33 % 63 percent of people in Germany already
forgo some current consumption to provide
France 17 % for the future, and a further 27 percent
Italy 20 % would be willing to do so, whereas those in
France, Italy and Spain are considerably
Spain 26 % more reticent.
I am very satisfied with my current personal Willingness to forgo some current
provision arrangements.4
consumption.
Germany 35 % Question 26: Have you already given up some
France 22 % things in order to make personal provision for
you future/your old age?
Italy 16 % Yes
Spain 24 % Germany: 63%
All respondents (N = approx. 1,000 per country). France: 36%
Top 2 boxes
Italy: 32%
1 Question 6b: In your opinion, is long-term financial
planning important for you to achieve your life aims? Spain: 30%
2 Question 6: And if you think about the future, how con-
Group: Persons not yet retired
vinced are you that you will be able to achieve your life
aims? Responses concerning the life aim “Financial securi-
ty for the future and old age”.
3 Question 29: Average life expectancy is rising continually,
so you will probably live longer than the generations
before you. Consequently, you will have a greater need
to make personal provision for your retirement. Do
you think that you have already made good provision for
living longer?
4 Question 10.2: How satisfied are you with your current
personal provision arrangements?
17

18. 2.4 Expectations of financial I know bank advisor well.
service providers. Germany: 63%
Germany: 60%
France: 51%
People need to feel that they can trust some-
France: 46%
one before they will talk to them about
Italy: 58%
their finances, and this is reflected in what Italy: 56%
they want from a financial service provider.
Spain: 48%
Above all, customers want an advisor who Spain: 40%
they know well, with whom they can form a
long-term relationship, who knows their per- We have been working together for a long time.
sonal situation, and above all, who is willing
Germany: 68%
to listen carefully to them. It is extremely Germany: 60%
important that the products available are France: 51%
transparent, but whether or not the advisor France: 45%
also sells products from other providers or Italy: 51%
has the possibility of consulting further Italy: 47%
experts it is less important. In brief, the mes- Spain: 44%
sage is clear: Less complexity, more trans- Spain: 42%
parency and greater customer orientation!
In all four countries, people still associate Bank advisor/Insurance advisor knows my
financial planning with banks far more than personal situation.
with insurance companies, and the expecta- Germany: 55%
tions of a banking advisor are still slightly Germany: 50%
higher than those of his colleagues in insur- France: 53%
France: 44%
ance. However, this difference can be as
little as one or two percentage points. Italy: 47%
Italy: 40%
Spain: 42%
Factors which influence satisfaction – Spain: 37%
advice from a bank.
Question 14: When think- Bank advisor/Insurance advisor listens carefully Bank advisor/Insurance advisor also advises on
ing about professional to me. products from other providers.
providers such as banks
or insurance companies, Germany: 76% Germany: 52%
what does your satis- Germany: 75% Germany: 51%
faction depend on when
France: 60% France: 28%
you receive advice from
France: 56% France: 28%
a(n) bank advisor/insur-
ance advisor? Which Italy: 65% Italy: 40%
aspects are most impor- Italy: 63% Italy: 39%
tant to you when given
Spain: 62% Spain: 39%
advice?
Spain: 55% Spain: 45%
bank
insurance Products are transparent. Bank advisor/Insurance advisor has access to
further experts.
Germany: 65%
Germany: 64% Germany: 52%
Germany: 50%
France: 54%
France: 53% France: 29%
France: 29%
Italy: 70%
Italy: 67% Italy: 42%
Italy: 40%
Spain: 63%
Spain: 57% Spain: 36%
Spain: 34%
All respondents (N = approx. 1,000 each country). Top 2
boxes. Results for countries as deviations from average
18

19. Life Aims II, 2005: Results – Comparison of countries.
Summary.
There are many similarities between people’s
life aims in the four countries where the
study was carried out. A good education,
financial security for the future and having
their own children are among the top five
life aims in all of the countries. Similarly, of
all the life aims deemed important, financial
security for their own futures is the aim
which the least people have achieved. What
is most alarming, however, is that not only is
there a discrepancy between desire and real-
ity as far as financial security is concerned;
but that it is by far the greatest discrepancy.
People living in Spain are most satisfied with
their lives right now and have also seen
the greatest improvement in their personal
situation in the last five years. People in
Germany and Italy, by contrast, are the
most critical of how much their lives have
improved over this time period.
In Germany there is a greater awareness
than in all the other countries of how impor-
tant long-term personal financial planning is.
As a result, the willingness of people there
to curb consumption now to provide for the
future is the highest, hence people in Ger-
many are most satisfied with their personal
provision arrangements.
19

20. 3 Results – The situation in
Germany.
Four years after the introduction of the
Riester pension secured by capital stock on
In the last two decades, a combination of several January 1, 2002, and after intensive debate
factors has served to significantly change the socio- in politics and the media, the question is to
economic landscape in Germany, not least German what extent the population of Germany has
reunification, which positioned the country in the changed its attitudes to personal provision
middle of an expanding European Union. Many people and whether or not this change has led to
are also now worried about the economy and about changes in behavior.
the security of their jobs, so even demographic change
and its far-reaching consequences sometimes fade 3.1 Life aims: Good education
into the background. Yet it is precisely Germany which most frequently cited life aim.
will be particularly affected, since its state pension
scheme is 85 percent funded by current contributions. The developments in the labor market are
leaving their mark, as 88 percent of Germans
say that “Good qualifications” are their key
Burkhard Wilke, Executive and responsible for a business, a department or an
Scientific Director of the German association knows the rule of thumb: a third of
those involved works actively toward and consid-
Central Institute for Social Issues
ers the common good, a further third jogs along,
and the remaining third has to be more or less
When asked to rank twelve different life aims in
carried by the others. This is actually confirmed by
order of importance, people in Germany put civic
the most recent survey of voluntary workers
engagement last! How can that be reconciled with
commissioned by the German Ministry for Family
the belief that Germany is the birthplace of the
Affairs: in 2004, 36 percent of the population had
concept that it’s “good to belong” to a club or
been working in some kind of voluntary capacity
association and that the Germans donate more to
for over 14 years, 34 percent were working in a
charity than any other nationality? Well, the second
voluntary capacity at that moment and 30 percent
of these beliefs is most definitely a myth: although
were not interested in voluntary work. However,
in absolute terms the Germans do give a lot to
the survey did provide a glimmer of hope, since
charity, in terms of pro-capita giving they are at the
hidden amongst the 34 percent of people who are
mid to low end of the scale when compared with
“co-joggers” are 12 percent who are willing to
other industrialized countries. Moreover, according
remain involved in a voluntary capacity in the long
to a recent GfK survey, the entirety of all charitable
term.
donations can be attributed to just 28 percent of
the German population. And although it is true
Our society needs to work hard to mobilize these
that there is a wealth of clubs and associations in
silent reserves. The voluntary sector needs to pro-
Germany, some 600,000 officially registered and
mote itself as being transparent and willing to
several hundred thousand more not registered,
develop, policymakers should remove the red tape
many of these principally exist to serve the leisure
which hinders the voluntary sector, and companies
interests of their members. Thus people who
should not only encourage people to do their bit
belong to them would hardly see their member-
for society, but also act as role models. After all, is
ship as civil engagement.
it really necessary for every single corporate social
responsibility (CSR) measure to come with a tag
Yet perhaps we should look at this response in a
attached detailing how it benefits the company? To
different light: 30 percent of people living in Ger-
paraphrase John F. Kennedy: Ask not what society
many say that civil engagement ranks among their
can do for you – ask what you can do for your
most important life aims, and 28 percent donate
20 society.
money to charity. That is a start, at least. Anyone

21. Life Aims II, 2005: Results – The situation in Germany.
life aim. They rank them well above “Being Importance and achievement
in a long-term relationship” (80 percent) and of life aims.
“Financial security for the future and old
88% Having a good education/
age” (78 percent). However, their main con- 28% 72% training
cern seems to be securing a job rather than
80% Being in a long-term relationship
having a good career, as only 65 percent 16% 84%
believe that “Career development” is an 78% Financial security for the future/
important life aim. 60% 40% old age
75% Individuality and the ability to
There was also an increased awareness of 35% 65% make my own decisions
the necessity for personal provision, with 75% Having my own children
94 percent of Germans assuming that they 20% 80%
themselves will have to take on responsibil- 73% Enjoying life right now
44% 56%
ity for providing for their futures. Only
10 percent consider themselves to be well- 70% Living healthily
50% 50%
informed about political reforms, and only
65% Career development
6 percent believe that the reforms of the
49% 51%
state social-security system will leave them
62% Having enough opportunity for leisure
adequately provided for in the future. 45% 55% activity and personal hobbies
60% Owning my own home
Thus the aim of “Financial security for the 27% 73%
future and old age” advanced to third place 38% Discovering the world – travel abroad
in the list of Germany’s most important life 54% 46%
aims with a score of 78 percent. What is 30% Civic engagement
more, since only 34 percent of respondents 28% 72%
have achieved this goal, it is here that there Poorly achieved Well achieved
is by far the greatest discrepancy between All respondents (N = approx. 1,000 each country).
the importance of a life aim and its achieve- Top 2 boxes
ment. Only 28 percent of Germans are satis-
Question 3: Now l’d like to mention several possible
fied with their financial security, which they personal life aims. Please tell me how important these
consider to be a major prerequisite for the are to you.
achievement of many other life aims such as
Question 3a: And to what extent would you say you
owning their own homes (79 percent), a have been able to achieve this aim so far?
secure future and old age (71 percent),
discovering the world (71 percent), having
a good education (52 percent) and having
children (50 percent).
Dr. Michael Eilfort, do and what that actually do. In reality, extremely
Managing Director of “Stiftung few people are making enough personal provision.
Marktwirtschaft”, a market-oriented
The reason for this is that in this country of wealth
economic-policy think tank
redistribution, the state is far too involved in
welfare. If we want people to take on more
“Our pensions are secure” – anyone who still
responsibility for their own welfare, we must give
believes this today probably still believes in Santa
them the chance to do this and also allow them to
Claus. Faced with massive demographic change,
retain more of their income so that they are in a
our social security systems are in no way future-
position to do it. Since the social security purse is
proof. Not only are the experts aware of this, but
empty, the only way to do this is for the state to
increasingly also the general public.
become less involved in welfare and focus on its
real tasks. That will lead not to a loss in terms of
Anyone who wants to maintain an adequate stan-
welfare, but rather to an opportunity to make the
dard of living in their old age simply must take out
system more dynamic, as well as vastly increasing
a personal pension. Yet in Germany there is still a
freedom.
huge gap between what people know they need to
21