One in five persons in CEE puts money aside for their retirement

  • Czechs, Slovaks and Slovenes are most active in saving money for their old age
  • Increasing need for special pension products
  • 70% of people under 29 have not yet thought about investments

In the countries of Central and Eastern Europe1, almost half of the active population has started or is considering investing in an additional private pension on top of the state pension. One in five persons in CEE already holds an investment product. This trend shows the scepticism towards the state pension system: on average, only 10 per cent of the working population assumes that the state pension will be sufficient to cover daily expenses after retirement. On the other hand, half of the working population has not yet thought about additional investments for their retirement.

These are some of the results of market research recently conducted in the CEE countries by Fessel & GfK, SMG_KRC, RmPLUS, TNS MODUS on behalf of Bank Austria Creditanstalt (BA-CA), a member of UniCredit Group.

"The gap between the population's scepticism towards state pensions and the number of people with an investment product for retirement shows the potential in the CEE region. The importance of professional advisory services and tailor-made, state-of-the-art products in this area will further increase. For banking networks such as UniCredit Group, this is a huge opportunity," says Andrea Moneta, BA-CA Managing Board Member responsible for CEE.

Overall, 20 per cent of the CEE population invests in retirement products. For comparison, in Austria already 60 percent of the population already started an additional privately financed pension and 30 per cent thought about such an investment. In the following CEE EU member countries, on average one in three persons has started investing for their future: 36 per cent of the active population in the Czech Republic, 34 per cent in Slovenia, 32 per cent in  Slovakia, and 31 per cent in Hungary. Poland is the only CEE EU country lagging far behind the others, with 8 per cent of the active population investing in private pensions.

In the South-East European countries, the proportion of people holding investment products for private pensions is lower than the overall CEE average of 20 per cent, with 10 per cent in Bulgaria, 7 per cent in Bosnia-Herzegovina and Romania, and 5 per cent in Serbia. The only exception here is Croatia, where 21 per cent of the population already use investment products.

In CEE, people between 30 and 39 are the most active in terms of investments for an additional pension. Overall, almost 60 per cent of this age group have already started saving for their retirement or are thinking about it. Younger people below 29 are at the other end of the scale: a majority of them, approximately 70 per cent, have not yet thought about any investments. "The interesting factor is: this young age group is the one which is most
insecure about its financial situation after retirement. Almost one in four persons under 29 does not know whether the state pension will be sufficient for living. On the other hand, this is the age group which is the least active in making provision for their future," says Martin Mayr, CEE market research expert at BA-CA. In Austria, with 12 per cent the insecurity of this younger age group is by far smaller.

"It will be a task for the banks to make young people aware of this gap and provide them with the right products. The "twens" have a huge advantage: due to the longer saving period, they would have to make far lower investments to receive sufficient additional payments from private pension sources. The earlier they start saving, the more they can profit later on", says Andrea Moneta.

"Special pension products" are in demand
47 per cent of the active population in the CEE countries that considers or has already started investing in a private pension chooses various "special pension products" (in Austria: 52 per cent). These are products which are clearly linked to the aim of "retirement planning" like pension funds, company pensions and pension insurance contracts. At 28 per cent, life insurance contracts are the second most attractive alternative for pension savings (in Austria:significantly higher with 44 per cent). About 27 per cent of the population intends to use "classical" saving products for investing money for their future (in Austria: 30 per cent). Some country-specific differences between product preferences can be observed: building society contracts are among the most preferred products for pension savings in the Czech Republic (30 per cent), Croatia (15 per cent) and Slovakia (14 per cent). Securities and investment funds in general (not specific pension funds) are used more frequently in Slovenia (13 per cent), Poland (11 per cent) and Slovakia (10 per cent). Serbians and Romanians often invest in real estate (18 and 13 per cent, respectively). In Austria, nearly one out of four uses building society savings (24 per cent).

Bosnians, Romanians and Slovakians tend to prefer savings products (BiH: 52 per cent, SK: 39 per cent, RO: 35 per cent). Life insurance contracts are favoured especially in Slovenia (47 per cent), Croatia (44 per cent) and Slovakia (39 per cent), followed by Serbia and Bosnia-Herzegovina with 34 per cent.

Amounts for possible investments still small
At present, the population in the CEE countries can invest relatively small amounts into a private pension. On average, people plan to save around 22 euros per month. In comparison, people in Austria are able to save 153 euros per month. "This gap highlights the potentials for pension products in CEE region. For the coming years we are estimating a significant growth in terms of wealth in the CEE countries. And pension products will be a
growth driver of the household's financial assets, with an annual increase of 19 per cent", says Andrea Moneta.

Slovenes and Croatians intend to make the highest investments, with an average amount of 36 euros. Serbia and Poland rank second, with an average amount of 27 euros in savings per month. Hungary and Bosnia are around the average of 22 euros, closely followed by the Czech Republic with 21.3 euros and Slovakia with 18 euros per month. One possible explanation for the lower levels in the Czech Republic and Slovakia is that the idea of saving for a pension has already reached middle and lower income classes, where people can afford smaller investment amounts only. In Romania and Bulgaria, the average savings potential is the lowest with 17.5 euros and 15.9 euros, respectively.

"Following the forthcoming EU enlargement, I expect Romania and Bulgaria to catch up quickly. In general, income increases and wealth gains in all CEE countries will result in higher savings ratios. Already today, people in CEE are looking for specialised savings and pension products. Accompanied by an income increase, demand for advisory services in the area of asset management will rise considerably," says Martin Mayr.

As a market leader in many CEE countries, UniCredit Group offers various pension products, as asset manager or distributor. In general, the banks of the Group are able to provide a full range of long-term retirement products: with own pension funds companies, in cooperation with insurance partners, as well as leveraging on Pioneer Asset Management's mandatory funds which can be used as long-term investments. "Due to the growing demand and the large potential, the topic of retirement planning will increasingly gain in importance. With tailor-made products and high-quality advisory services, we want to be close to our customers’ needs and offer the best possible services for all age groups," says Andrea Moneta.

UniCredit Group operates by far the leading banking network in CEE. In terms of revenues and total assets, the Group is twice as strong as the nearest competitor in the region. The Group's banking network comprises 17 countries in CEE; 65,000 employees serve 24 million customers in 3,000 branches. Within the Group, Bank Austria Creditanstalt is responsible for managing the banking activities in the CEE region2.

1 Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
2 Except Poland's Markets Division, which is steered directly by UniCredit Group.

Ildiko Füredi-Kolarik
Bank Austria Creditanstalt, International Press Relations
Tel: +43-50505-56102, e-mail: ildiko.fueredi-kolarik@ba-ca.com