Analysing retirement planning awareness among the future working generation

Abstract

Analysing Retirement Planning Awareness among the Future Working Generation – A study identifying the perception of the younger generation, particularly students, on retirement saving Retirement planning involves the process of all possible decisions that an individual can take today in order to be able to provide for his/her financial future during retirement age. It is important that one sets out the main goals, well in advance, that are intended to be reached upon retirement. For some, retirement is something to look forward to, providing an opportunity to explore things that they may not have had time for during their working life. Others may dread this time and prefer not to think about this period. The topic of pension plans stemming out from the need for retirement planning has been at the forefront of the national agenda for the past 20 odd years. Pension plans enable consumption smoothing so that the individual can enjoy a comfortable lifestyle during retirement. The primary form of pension provision in Malta is the first pillar pension arrangement under which workers and employers pay National Insurance contributions and the state, in return, provides an income after retirement. However the life expectancy in Malta has been on the increase and the European Statistical Office projects that by 2060 there will be only two people of working age (15 to 64) in the EU for every person aged over 65, compared to the ratio of four to one today (Decelis, 2013). From such a statistic, one can easily conclude that state pension plans may no longer be sustainable by the government. Life assurers however are well positioned to ease the burden on public pension schemes by providing funded pensions. This study will therefore address issues around the importance and the awareness of starting a retirement plan. The main issues addressed will be;  The level of awareness of retirement planning within the future working generation  What criteria affect the level of awareness with particular reference to financial literacy  The view of the providers of retirement planning solutions on the level of awareness that they think is present among the future working generation  An analysis of the reasons why individuals:  Take up some form of a retirement plan  Do not take up some form of a retirement plan  The importance of starting an early retirement plan  The position of the 3 pension pillars in Malta The research methodology for this dissertation will be mainly viewed from the consumer perspective; that is the future working generation aged 18-25. The targeted segment is students from both genders which would have either been working on a part-time basis or have had previous jobs. Qualitative questionnaires were distributed via internet. This age group was also chosen due to the fact that at age 18, most individuals would have grasped a minimum level of knowledge about retirement plans. In addition qualitative interviews were undertaken to obtain information from financial services companies about their views on the marketing of private retirement plans.