FIAR 2018: LIFE INSURANCE & PRIVATE PENSIONS: Funded pensions are vital for future retirees as public pension will be lower than before

The current state of the Romanian life and private pensions segment and also the main trends on both local and European level were among the topics discussed with the occasion of LIFE INSURANCE & PRIVATE PENSIONS - Long-term Savings and Investment Solutions Conference, during FIAR 2018.

Matti LEPPALA, Secretary General CEO, PensionsEurope & Chair, OPSG of EIOPA
  • Does longer life expectancy create demographic issues? According to the OECD, the old-age dependency ratio, which is the ratio of older dependents (people older than 64) to the working age population will increase from 28% in 2015 to 51% in 2050.
  • The 1st pillar PAYG pensions will face tremendous challenges: the financial and social sustainability, as well as the sustainability of public finances might become uncertain.
  • We are also encountering structural changes in the labor market: there are more self-employed workers. Is automatic enrolment to pension schemes needed in order to safeguard adequate and sustainable pensions?
  • Technological breakthroughs: we now have easy-to-use applications to follow up all pension savings, returns, costs etc.
  • PensionsEurope believes that private pension saving should be encouraged to compensate for potential lower state pension benefits. In particular, we support a regulatory environment encouraging workplace pension membership.
  • PensionsEurope promotes good pensions for the people in Europe in all different shapes and forms. Supporting the PEPP: it could be useful in those countries with no well-developed 2nd pillars, for self-employed and people in atypical forms of work, and for mobile people.
  • There is the need of long-term planning on pensions (multi-pillar approach) to tackle the "pension gap".
  • It is important to diversify the sources of retirement income.
  • Pension funds play an important part in economic growth and financial markets.
  • Funded pension are vital for future pensions as public pension will be lower than before.
  • Good pension reforms are based on in depth analysis and long-term goals on adequacy and sustainability.
Radu CRACIUN, President & CEO, BCR Pensii, President APAPR:
  • Compared with the situation in 1956, the age pyramid in Romania is reversing, the number of elderly persons becoming higher than the one of the active persons.
  • Between 1989 and 2017, Romania lost approximately 3.5 million people from its resident population.
  • Romania will register the 7th highest reduction of population between 2017 and 2050 worldwide: from 19.7 million people in 2017 to 16.4 million people in 2050 (17%).
  • Apart from the aging of the global population, 51 states will also face a reduction of the population, Romania being among the states with the highest reduction of population in the following decades as well.
Ciprian LADUNCA -
CFO, METROPOLITAN Life:
  • Romania has to recover a significant gap in the financial education of the population: only 1 in 5 adults in Romania has an understanding of basic financial concepts.
  • The low level of financial education is correlated with a low degree of financial inclusion: 4 out of 10 Romanians do not have a current account. Also, only 19% of Romanians save for retirement.
  • Partially, low levels of financial inclusion and savings are explained by a low level of per capita income. The per capita income is at 62% of EU average (at purchasing power parity).
  • At a low level of per capita income, basic needs have priority over insurance and savings: 70% of Romanian consumpture expenditure is allocated to basic needs.
  • Demographic trends indicate the need to supplement and diversify sources of income in the post-retirement age. The median age of the population is projected to reach 47 in 2050, according to current trends. The degree of economic dependence will increase to 1.74 pensioneers per employee by 2050.
  • According to the projections, over 30 years from now (2048), Pillar I and II pensions will ensure a rate of income replacement of only 52%, resulting in a gap of 18% compared to the recommended level of 70%.
  • Romanians allocate only EUR 18 per year for life insurance, compared to the EU average of EUR 1.300. at the same time, life insurance remained below 0.3% of GDP, even if GDP per capita increased constantly.
  • On an individual level, the awareness for long-term savings is necessary. Ensuring adequate incomes during the post-retirement period becomes a personal responsibility.

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

Share |

Related articles

How can you set up a successful Bancassurance strategy?

Between 12 and 14 June, the "Bancassurance Asia Masterclass 2019 June" gathers together Managing Directors, Directors, Heads of Departments, Managers & Senior Executives activating in Bancassurance. The event is supported by XPRIMM Publications as Media Partner.

2019-02-20

The 15th International Risk Management Conference to take on 11-12 April 2019 at The Ritz-Carlton hotel in Almaty, Kazakhstan

The 15th International Risk Management Conference taking place on 11 and 12 April 2019 at The Ritz-Carlton hotel in Almaty, Kazakhstan. Since 2005, this Conference has become a traditional event not only for the insurance sector of the CIS countries, but has also acquired the international status. XPRIMM Publications is a traditional media partner of the event.

2019-02-07

Inclusive Insurance - just a week to the second edition of IIF - CEE & SEE Regional Actuarial Insurance Conference in Skopje

Insurance should be accessible to all social classes, regardless of their wealth & income status. Products offered today are conventional insurance products, largely inspired from the developed markets as "one-size-fits-all" solutions, affordable to only middle- and high-income clients in the Eastern Europe's emerging & developing markets. Inclusive insurance's goal is making insurance available to all, with responsible insurance offers, thus making up for a solution to narrow the insurance coverage gap in the region.

2019-02-20

Latest trends and challenges in the property and motor insurance lines under scrutiny, in Vienna

Property and motor insurance lines are providing for about 75% of the non-life insurance business in the CEE region, but are responsible for over 77% of the claims expenses. As such, although other classes of risks are emerging, for the time being and most probably for a rather long period ahead, property and motor insurance lines will continue to be at the heart of CEE's insurance market architecture.

2019-02-21

ON THE MOVE

Supervisory Board Chair NN Group steps down

NN Group announces that Jan HOLSBOER, chair of the Supervisory Board of NN Group, has decided to step down as of the close of the annual general meeting (AGM) on 29 May 2019. The Supervisory Board has elected David COLE as Jan HOLSBOER's successor.

20.02.2019

Peter CLARKE named VP & COO of FAIRFAX

FAIRFAX Financial Holdings Limited announced that Peter CLARKE has been appointed Vice President (VP) and Chief Operating Officer (COO) of FAIRFAX, reporting to FAIRFAX President, Paul RIVETT.

12.02.2019

TOP EVENT

Inclusive Insurance - just a week to the second edition of IIF - CEE & SEE Regional Actuarial Insurance Conference in Skopje

Insurance should be accessible to all social classes, regardless of their wealth & income status. Products offered today are conventional insurance products, largely inspired from the developed markets as "one-size-fits-all" solutions, affordable to only middle- and high-income clients in the Eastern Europe's emerging & developing markets. Inclusive insurance's goal is making insurance available to all, with responsible insurance offers, thus making up for a solution to narrow the insurance coverage gap in the region.

20.02.2019

Latest trends and challenges in the property and motor insurance lines under scrutiny, in Vienna

Property and motor insurance lines are providing for about 75% of the non-life insurance business in the CEE region, but are responsible for over 77% of the claims expenses. As such, although other classes of risks are emerging, for the time being and most probably for a rather long period ahead, property and motor insurance lines will continue to be at the heart of CEE's insurance market architecture.

21.02.2019

FIAR 2019: Register before 28 February and save EUR 400 of the attendance fee

To the satisfaction of its traditional guests, FIAR returns in 2019 to its historical hometown, Sinaia. The forthcoming edition will benefit from the comfort and professional facilities of a new venue, the Conference Center of the International Hotel ****, located in the heart of the beautiful mountain resort. Registration is opened at a significantly discounted early bird rate until 28 February.

10.01.2019

See all