Employees in Europe face a seriously reduced standard of living once they retire unless they increase their pension savings, according to Aviva's research Mind the gap - Qualifying the pensions gap in Europe.
In its assessment of the £1.6 trillion gap between the savings that people retiring in 27 EU member states between 2011 and 2051 will need, the insurer deduced many will have to rely on non-pension assets, retire later or work in retirement.
The pensions gap is the equivalent of 19% of the European Union's gross domestic product (GDP). At a country level in absolute terms, the UK, France, Germany and Spain have the largest national pensions gaps.
The shortfall is most severe for those within 10 years of the state retirement age because they will not have time to build up adequate savings to make up the difference before they retire, so have to consider drawing on non-pension assets such as property.
However, the picture is brighter for younger savers. For example, a 40-year-old in the UK will need to increase their annual savings by an average of £3,700 to close their personal pensions gap, while someone of the same age in Spain must save €2,900 a year.
Andrea Moneta, chief executive of Aviva Europe the Middle East and Africa, said: "We cannot ignore the fact that longer life expectancy brings with it new challenges for governments, individuals and the industry. All relevant stakeholder should ensure life is not just longer, but richer in every sense.
"It is time for a fresh approach - a partnership between the European Commission, national governments and the insurance industry to develop stronger savings culture. Measures taken recently by national governments and the publications of the pensions green paper by the European Commission are positive steps but we need more and to turn new ideas into actions quickly."
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