Life Aims II, 2005.

People in Germany, France, Italy and Spain.

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 I I, 2005: Editorial.

Editorial.

Dear Readers,

As we grow up, each and every one of usdevelops life aims which influence how welive our lives. These may change a little overtime, depending on what turns life takes,but as a rule they are a stable frameworkwhich we depend on to guide us throughlife. This study explores these life aims andhow people feel about them at this momentin time.

Germany, Italy, France and Spain have richand diverse cultures, so it was no surprisewhen the survey showed that the four popu-lations have different opinions regardingwhich life aims are most important. Yet, thisstudy shows something else. The countriesare all linked by one common denominator;respondents in all four said that achievingthe life aim of being financially well pro-vided for in old age makes them feel mostuneasy. If they analyze how satisfied theyare with their lives right now, they recog-nize that they have not yet done enough toachieve this aim, and it is becoming moreand more evident to them that it will remainunachievable if they rely on the state pen-sion alone.

Nowadays, the reasons for this are wellknown. Birth rates have been falling formany years and medical advances have ledto increased life expectancy. Consequently,the state pension systems in their currentpay-as-you-go form, funding expenditurefrom current contributions, are being sub-jected to a test of strength. Clearly, theycannot pass this test. The writing is on thewall – reform is inevitable.

This new Life Aims study is a continuationof our research first embarked upon whenAllianz carried out its first study of the lifeaims of people in Germany in 2004. Thistime we have cast the net wider to take inthe views of people living in a further threeEuropean countries. Thus our study hasbecome more international, and the result-ing comparisons have been illuminating.In addition, the methodology of the studyhas been honed so that we are left with adetailed snapshot which reveals the deep-seated opinions, desires and hopes of peoplein our core European markets.

The findings contain an important messageto policymakers. They must continue toencourage people to take responsibility forsetting up their own personal provisionplans for the future. Policymakers must alsogive people the necessary financial freedomto do this so that they can build up a supple-mentary pension secured by capital stock.The baby-boomers of the late fifties andsixties have little time before they reachretirement age.

To achieve the life aim of “financial indepen-dence in old age”, people need and are seek-ing professional advice and help. Allianz hasalways seen itself as a business partnerwhich helps its customers to solve theirfinancial dilemmas efficiently. As this studyshows, the challenges have become biggerand not smaller. This motivates us evenfurther to listen to our customers attentivelyand wherever possible to offer them a com-prehensive solution which is transparent andflexible enough to adapt as people’s situa-tions change.

Best regards,

Michael DiekmannCEO of Allianz AG

4

Life Aims I I, 2005: About the Life Aims II study.

About the Life Aims II study.

Allianz conducted the Life Aims II study todiscover to what extent people living inGermany, France, Italy and Spain believethat satisfaction with life, life aims andfinancial planning are interlinked. Whatkinds of life aims have the greatest effect onhow satisfied people are? What importancedo people attach to achieving particular lifeaims and how likely do they think it is thatthey will achieve those aims? And what roledoes their financial situation play in all ofthis? Allianz commissioned Nurembergmarket research institute GfK to design andcarry out the study.

The first Allianz Life Aims study, publishedin January 2004, polled only people livingin Germany. By contrast, the Life Aims IIsurvey, conducted between June and August2005, included a further 1,000 people ineach of the countries France, Italy andSpain.

We wanted to know: • How prepared people in these four countries

are for a demographic change which is set topush the current pay-as-you-go financedsocial security system to its limits.

• What people think about the reforms whichare necessary and about the changes to howresponsibility for social welfare is dividedbetween the state and themselves.

• Whether the intensive discussion about old-age provision in the German politicalarena and in the German media has ledto greater changes in the knowledge andattitudes of people there than in the otherthree countries.

• Whether the shift in attitudes which seemedto have begun when Life Aims I was carriedout has also led to changed behavior con-cerning personal provision, and if not, whynot.

• Whether these developments have alsoresulted in changed expectations of financialservice providers, and if so, what the expec-tations are.

Our analysis of the study brought to light awhole range of intriguing differences, notonly between people living in different coun-tries, but also between those in different agegroups or at different stages of their lives.For example, people with young families arethe most satisfied with lives, although theygenerally have little disposable income.However, when we look carefully at thisgroup we can see that the extent to whichthey have planned their finances has clearlyinfluenced the extent to which they havebeen able to achieve their life aims and bydefault also affected how satisfied they are(more analysis of the results from Chapter 2onward).

This document summarizes and presentsthe most important results in the chaptersentitled “Results – Comparison of countries”,“Results – Germany”, and „Results – Specifictarget groups”. The special chapter entitled„Background information on the countriesin the study” contains a brief synopsis byAllianz economists of the demographic,economic, political and media climates ofthe four countries where the survey wascarried out. Further information on this canbe found in the Appendix and atwww.allianz.com/lifeaims.

Does money make people happy? What is the link

between long-term financial planning, personal

provision and life aims?

5

Life Aims I I, 2005: Background information on the countries in the study.

More than ever before, the lives of people inthe countries where the study was carriedout are influenced by the changing socio-eco-nomic landscape. The demographic changedue to take place over the next few decadeswill upset the delicate balance between thenumber of people in gainful employmentand the number of those receiving pensions.At the same time, the difficult economic sit-uation is reducing the scope available to pol-icymakers to implement sustainable reformof the social security systems. In this periodof rapid change, the media pay a key role indisseminating information.

In order to get a better picture of howcrucial an influence socio-economic factorsactually are, we analyzed the currentsituation in all four countries.

1.1 Demographic development.

The best measure of demographic develop-ment is known as the dependency ratio,which is defined as the number of peopleaged over 65 divided by the number ofemployable people aged between 15 and 64.In all four countries, this ratio will deterio-rate considerably. While there are currentlystill more than three people in gainfulemployment for every person in retirementin Germany and Italy and indeed four inFrance and Spain, in all four countries thisratio will fall to less than two people inemployment for every person in retirementby 2050 (see Table 1).

However, the extent to which the countrieswill be affected by these changes varies. Italywill be the vanguard of ageing populations.While today there are only three persons inretirement for every ten persons in gainfulemployment, by 2050 this will have increas-

ed to more than six. In Germany the popula-tion pyramid is currently very similar, butits population will age less quickly than thatof Italy; in 2050 there will be five retiredpersons for every ten in gainful employment.

Table 1: Dependency ratio today and in 2050:

Number of over-65s per 100 persons aged

between 15 and 64.

The current population pyramids of Spainand France are slightly less top heavy, asboth countries have dependency ratios ofapproximately 25 percent. However, thedemographic change will also cause these torise considerably. Spain in particular willexperience considerable change. In 2050,Spain’s population will be one of the oldest,second only to Italy. By contrast, populationaging will be slightly less dramatic in France,

1 Background

information on the countries

in the study.

The populations of the four European countries

Germany, Italy, France and Spain will age dramatically

and shrink in the next few years. The countries most

affected by this are Italy and Germany, with Spain

following suit somewhat later. In all four countries,

the demographic change will create an intolerable

burden on social security systems which are currently

funded primarily from current contributions on a

pay-as-you-go basis.

Germany

2005 2050

France

28.5 51.0

25.0 51.4

Italy 29.7 63.2

Spain

Source: National statistics offices

24.5 55.1

where the dependency ratio in 2050 is likelyto be similar to that of Germany.

In all four countries, increasing longevityand a fall in birth rates are the principal rea-sons for the predicted demographic age shift.Life expectancy at birth is around 77 yearsfor males and 84 years for females in all thecountries, which means that in the last 40years life expectancy has risen by about tenyears (see Table 2). This trend is expectedto continue in the next few years, indeeddemographers expect life expectancy toincrease by a further four years in the next30 years.

Table 2: Life expectancy of males and females

at birth (years).

However, the fall in birth rates has beeneven steeper than the increase in lifeexpectancy. While 40 years ago the averagenumber of children per woman was wellabove the figure of 2.1 needed to maintainthe population level, birth rates in all fourcountries have now fallen below that. Ger-many, Italy and Spain have very similar birthrates of between 1.2 and 1.4 children perwoman, but in France the birth rate is quitea lot higher at 1.9 (see Table 3).

Thus the demographic pressure on socialsecurity systems is high in all of the coun-tries. Forecasts of how the age structure willdevelop based on life expectancy and birthrates are relatively precise. If anything, thespeed of medical progress and the accompa-nying increase in life expectancy has beenunderestimated up to now. And even if birthrates recovered, the effects of this would notbe felt immediately, as many years wouldpass before the “extra children” reachedworking age. It is thus quite clear that the

demographic change makes it impossible forpension policymakers to continue “businessas usual”.

Table 3: Birth rates in 1965 and today.

1.2 Economic situation.

Germany.In the last ten years, Germany’s economyhas grown markedly more slowly than thoseof its European neighbors, with annual GrossDomestic Product (GDP) growth regularlybelow the European average since 1995.There are many reasons for this weakgrowth: German reunification, the loss ofcompetitive advantage on the internationalmarket as a result of excessive wage rises inthe early nineties, and a somewhat inflexiblelabor market.

Nevertheless, the extremely unfavorableeconomic situation Germany has sufferedsince 2002 detracts from some importantpositive changes which have taken place inGermany. Many companies have hugelyincreased their competitiveness, a develop-ment reflected in the fact that Germany nowexports more than any other country in theworld. Restructuring and consolidation havedriven down costs and increased profits. Thenegative effect of this unfavorable situation,however, is that private consumption isweak. This, coupled with the structuralcrisis in the construction industry, continuesto hold back domestic demand.

Due to this weak domestic demand, lower-ing the unemployment rate which currentlystands at 11.2 percent will be a slow process.If we apply the rule of thumb that growthof over one percent is needed to createadditional jobs, then regular employmentwill increase only gradually.

Germany

Males

1960 Today

Females Males Females

France

66.9 72.4 75.6 81.3

66.9 73.6 76.7 83.8

Italy 67.2 72.3 77.8 83.7

Spain

Source: National statistics offices

67.4 72.2 77.7 84.0

Germany

1965 Today

Italy

2.5 1.4

2.7 1.3

France 2.8 1.9

Spain

Source: National statistics offices

2.9 1.2

6

Life Aims I I, 2005: Background information on the countries in the study.

Public finances are already stretched, andfurther belt-tightening is necessary ifGermany is to conform to the Maastrichtcriteria. Quite rightly, consolidating publicfinances is seen as an important goal of thenew government.

In the coming years it seems extremely likelythat the economic situation will improve.However, it is important to realize thatmiracles do not happen overnight; annualGDP growth of 1 to 2 percent seems realisticin the medium term.

France.Although the French economy has been onthe road to recovery since about mid-2003,this year’s real rise in GDP is only expectedto be a modest 1.5 percent or thereabouts.One of France’s main problems is highunemployment, which the de Villepingovernment has said will be uppermost onits agenda. The number of people in gainfulemployment has been stagnating for quitesome time now, and although the unemploy-ment rate recently fell below the 10 percentmark, thus appearing less ominous, thisseems to have been primarily due to changes

in labor market policy. Any improvement inemployment brought about by a healthiereconomy is likely to be gradual at best.

Public finances are another weak point. Lastyear the deficit ratio was 3.6 percent, andthis year and next year too it is forecast tobe above 3 percent. Thus France is unlikelyto be able to meet the Maastricht criteria

Economic growth in Germany, France and Italy has

been unsatisfactory in recent years, and as there is no

indication that this trend will be reversed. Receipts

from social insurance contributions will continue to

be to be insufficient, making reform of the social

security system even more inevitable. At the same

time, however, the disposable incomes of private

households will rise only marginally, so that as far as

their finances are concerned, many people will be

extremely limited. The positive exception to this trend

is Spain, which thanks to its balanced public budget is

enjoying not only a good economic situation but also

a healthy social security system.

Dr. Michael Heise,

Chief Economist of Allianz Group and

Dresdner Bank

In the next few years the new German government

needs to address the task of adapting the social

security system to the new demographic reality, so

it is good that the issue of increasing the state

pension age has already been raised. Together

with measures to boost growth by increasing the

productivity and employment rates, this will be

key in helping to lessen the burden on the social

security system.

However, these stabilization measures will not be

enough. In order to make the German social secu-

rity system future-proof, a far greater percentage

of old-age provision must be secured by capital

stock:

• As far as capital-secured pensions are concerned it

is not a question of introducing new products, but

far more one of making the existing products more

attractive, making it easier to access state aid and

thus making them accessible to everyone, what-

ever their income bracket.

• Capital-secured nursing care insurance should be

introduced gradually via a mixed model. Supple-

mentary private care insurance plans secured by

capital stock would allow a greater range of care

services to be provided and would also permit

social insurance contributions for nursing care to

remain at their current level.

• In health insurance, too, the financial situation

could be stabilized by moving certain blocks of

services from the sphere of pay-as-you-go

financed health insurance into a capital-covered

system. Examples of areas which could be

removed are dental treatment and dental prosthe-

ses, accidents which are not work-related and

sickness benefit.

What policymakers must not lose sight of whilst

discussing reform of the social security systems is

that we are running out of time, because due

to our demographic situation we only have some

15 years to build up the necessary capital stock.

7

and a balanced budget remains but a futuredream.

However, forecasts of economic growth arearound 2 percent for the next few years, andthus close to the average of the euro areamember countries.

Italy.In Italy as in Germany, the economy is grow-ing more slowly than the European average.The manufacturing industry in particular isin crisis. Italy’s traditional export productsare suffering from weak sales as the technol-ogy content of these goods is low and pricecompetition high.

The unemployment rate in Italy thus remainsrelatively high at 8 percent. Furthermore, as further structural change is expected inindustry, the number of gainfully employedpersons will tend to increase more graduallythan it has done so far.

The high level of public debt, which hassoared once more to some 108 percent ofGDP, will also continue to impede any gov-ernment attempts at implementing policieswhich 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 euroarea member countries.

Spain.The Spanish economy continues to enjoystrong economic growth significantly abovethe EU average. This is primarily driven byprivate demand, as rising wages and lowinterest rates create an advantageous climatefor consumption. At the same time, the con-struction industry is booming, with publicinvestment in infrastructure continuing toguarantee full order books.

However, despite a significant rise in thenumber of people gainfully employed, theunemployment rate remains relatively highat 11 percent, and the labor market situationis not set to improve in the next few years.

Unlike the other three countries, Spain hasmanaged to achieve a balanced public bud-get for several years now. The fiscal situationprovides the government with the freedomto pursue an active expenditure program aswell as to reform the social security system.

In the next few years, GDP growth shouldcontinue to remain strong at over 3 percent.

8

Our social security system is a financial obligation,

a form of debt, that is how economists see it. Their

calculation is simple: if the population continues to

age as the age pyramid indicates it will, economic

growth remains weak and social insurance expen-

diture remains at the same high level, debt will

rise further. According Standard & Poor’s and the

World Bank, by 2050, this debt could be 200 per-

cent of Gross Domestic Product (GDP). Such a

high level of debt would make German govern-

ment bond issues as good as worthless. The Ger-

man pensions authority should include this calcu-

lation in the letter it sends out to the population

about how much pension they will receive.

Andrew Bosomworth,

PIMCO portfolio manager

If German policymakers try to reduce the country’s

deficit by raising taxes and reducing expenditure

alone, without tackling the causes of the deficit by

reforming the labor market and reducing red tape,

they will be making a mistake. Until the employ-

ment problem is resolved, the deficit will continue

to expand. They need to reverse the order of

priority in which they do things by implementing

reforms first and accepting that these will lead to a

budget deficit. Once reform has taken place, the

growth which is needed to improve public

finances will come, just as it did in the United

States and Great Britain at the end of the 1980s.

Life Aims I I, 2005: Background information on the countries in the study.

1.3 Social security systems

and reforms.

The social security systems of all four coun-tries are pay-as-you-go systems, meaningthat the contributions of those currently paying social security contributions are usedto cover current expenditure on pensions,healthcare and nursing care.

In all four countries, people are providedwith a high standard of medical care and acomprehensive range of healthcare services.However, state healthcare systems will beconfronted with serious problems in thefuture. The demographic change of the nextfew decades, the continuing advances inmedical technology, rising prices for health-care services and the accompanying rises incontribution rates will soon threaten tooverload the state pay-as-you-go systems.

Where pensions are concerned, for yearspeople living in the four countries includedin the study could be sure that when theyretired they would receive a pension whichwould almost completely secure their stan-dard of living; on entering retirement theywould receive approximately 70 percent ormore of their final salary. Pension adjust-ment was usually in line with the develop-ment of wages, so everyone could see peoplearound them who were older than them-selves continuing to live well and share ineconomic progress.

As the countries are currently in differentstages of pension reform and have differentsocio-economic conditions, the awarenessof how necessary it is to make personalprovision for the future varies. In Spain inparticular, the fact that the economy iscurrently flourishing is tending to masklong-term problems. Since there is also littlediscussion on pensions in the political arenaat present, the population still has scantknowledge of the problem.

The different historical contexts also lead todifferent perceptions. In Italy, the socialsecurity system was traditionally more com-

prehensive than it was in Germany, so therewas correspondingly less need for peopleto get to grips with personal provision plans.The income threshold for state pensionsthere, for example, is a good 30 percenthigher than in Germany, meaning that thegroup of people with higher earning powerwho are above the threshold is muchsmaller. In Italy, self-employed people arealso covered by the state pension system,whereas in Germany the self-employed areresponsible for their own old-age provision.In addition, in Italy the transition periodsfor the reforms already passed are very long.It is thus perfectly conceivable that unlikepeople in Germany, most of the Italian popu-lation are not particularly aware of howmuch the reforms will effect their personalsituations.

Germany.The amount of money in the German socialsecurity purse is worrying. In addition to thedemographic shift, high unemployment andthe consequent reduction in the number ofgainfully employed persons obligated to paysocial insurance contributions are the maincauses of the difficult financial situation. Inorder to stabilize the situation, the Germangovernment has recently implemented twoquite substantial reforms.

As part of the pension reform of 2001, thepension formula was adjusted. The effectof this reform is a long-term reduction inthe average gross state pension level from48 percent today to 41 percent in 2030. Tocushion the effect, this adjustment wasaccompanied by the introduction of theRiester pension on January 1, 2002, whichprovides state subsidies depending on thenumber of family members and the marginaltax rate.

The demographic change in Germany, France,

Italy and Spain will affect the future stability of pay-

as-you-go social security systems, both healthcare

systems and pension systems.

9

10

As a result of the 2004 pension reform, theamount of tax charged on pensions is gradu-ally changing, and pensions will eventuallybe fully taxable by 2040. At the same time,subsidies for payments into pension planswere introduced. In order to further encour-age people to take out pensions secured bycapital stock, the basic pension (Basisrenteor Rürup Rente) was introduced. Contribu-tions to this are seen as special expenses andas such are tax deductible. This year themaximum amount which can be deductedfrom tax is 12,000 EUR, but the figure willrise to 20,000 EUR in 2025.

In Germany there are now numerous old-ageprovision products secured by capital stock.Traditional life insurance products havebeen joined by the Riester pension and thebasic pension, known as the Rürup pension,and there are also several ways of organizingpensions through companies. However, theamount invested in these products is stillsmall in comparison to the state pension.

France.In France as in Germany, the state pensionscheme is a compulsory pension schemefinanced by pay-as-you-go tax contributions.State pension payments are means testedand after 40 years of contributing themaximum amount someone can receive is50 percent of the income threshold forcontributions assessment. The minimumpension is currently 599.94 EUR a month,but is only paid to people over 65. Despitethis state pension age of 65, or 60 if theperson has paid contributions for 40 years,the actual average retirement age in 2002was 58.

France has two company pension schemes,ARRCO, which is open to all those inemployment, and AGIRC, which admitsonly those in managerial positions. Theamount of pension received is determinedby the level of contributions paid, whichis converted into points, and the schemes arefinanced by contributions from employeesand employers. In 2004, personal savingsplans for old age were introduced. Paymentsinto these plans are currently tax-free with agenerous upper limit.

Payments from the two schemes amount toapproximately 75 percent of the person’sfinal salary. In total, some 51 percent of theincome in a retired household is from astate pension, 34 percent is from a companypension and 15 percent from personal provi-sion. As reforms were implemented fairlyrecently, there are no reforms planned in theimmediate future.

Italy.The state pension system in Italy is also acompulsory pension scheme financed bypay-as-you-go tax contributions, with a statepension age of 65 for men and 60 forwomen. Anyone who has paid contributionsfor at least 20 years has the right to draw astate pension, although to receive a full pen-sion the person must have contributed for40 years. The amount of pension receiveddepends on how long the person has paidsocial insurance contributions for and whenthey began to make those payments. In thefuture, people who have been contributingsince January 1, 1996 or later will receivenot the minimum pension but what isknown as a “retirement allowance”. Cur-rently, the average household of retiredpersons receives 74 percent of its incomefrom a state pension, only 1 percent from acompany pension and 25 percent fromprivate savings.

In Italy, the second and third pillars arehardly developed at all. The reforms inrecent years, such as gradual raising of thestate pension age and the transition frompensions based on final salaries to pensionsbased on the amount of contributions paidare leading to a gradual decrease in theamount of state pension received. However,further reform is inevitable. One idea whichhas been on the table for several years nowis converting compulsory golden handshakes(Trattamento a Fine Rapporto) into a pensionproduct secured by capital stock. However,policymakers appear to be continuing tohold off implementing this.

Life Aims I I, 2005: Background information on the countries in the study.

Spain.In Spain, the state pension accounts for 92percent of retirement income, while bothcompany and private pensions are uncom-mon. The state pension age is 65 and theamount of pension received depends on thenumber of years for which the person hascontributed and the basis of assessment.This is calculated from the income liable tocontributions which the person receivedduring the 15 years directly prior to reachingstate pension age. Although it is also pos-sible to draw an early pension on reachingthe age of 60, if the person does not draw apension until they have reached the age of65 and after they have paid contributions forat least 35 years, they receive an extraallowance.

Despite indications that the population isaging, in Spain there is currently no debateon implementing reform. Relatively strongeconomic growth and a high level of immigration are currently concealing theproblems which demographic change willcause.

1.4 Media and public opinion.

The media influence people’s attitudes andopinions and are thus taking on a decisiverole in the development and continuation ofmodern democracies. A comprehensiverange of information from all media sourcesenables people from all walks of life toperceive the forces which are at work insociety.

Example – Germany.In Germany, a strong focus on the issue ofpensions both in political debate and inthe media has raised people’s awareness ofthe need to make personal provision forretirement. Between 2001 and 2004, forexample, there was extensive coverage inthe television news of the condition ofthe pension system in Germany. There havebeen times when more than half of whatwas reported about the condition of Ger-many’s social security system, particularlyon the television news, concerned thesystem for old-age provision. This has raisedawareness significantly and the effect haslasted. (Source: Media Tenor, September2005).

Dr. Moritz Kraemer,

Standard & Poor’s Director (Europe)

Aging populations inevitably lead to enormous

burdens on public budgets. Public expenditure in

Germany, for example, will have risen by over five

percent of Gross Domestic Product (GDP) by the

middle of the century.

If no sufficient measures are implemented to

change this course of events, for example reform-

ing social security systems and increasing the

employment rate, then public debt will spiral out

of control. Public debt in Germany will increase at

breakneck pace as of 2025, when demographic

pressure starts to become unbearable, and will

have rocketed to over 220 of GDP by 2050. There

is no avoiding the fact that such a development

will lead to concern about the country’s credit-

worthiness. Its credit ratings will go into free fall

and investors will demand higher risk premiums,

causing the budgetary black hole to implode yet

further.

The ideal time for stemming the tide has already

passed. Thus, in addition to bold reforms of the

healthcare and pension systems and policies

which inject vitality into the labor market, swift

consolidation of public finances is paramount.

Surpluses must be created as quickly as possible

in order to provide enough financial flexibility to

prevent the country’s economy collapsing.

2010 2015 2020 2025 2030 20352005

Germany France UK USA

Hypothetical Sovereign Ratings

(based on general government balance performance).

AAA

AA+

AA

AA–

A+

A

A–

BBB+

BBB

BBB–

Assuming no change in

current government fiscal

policies. Standard & Poor’s

takes a large number of

factors into consideration

when deriving sovereign

credit ratings. In the very

long-term, prolong fiscal

imbalances tend to become

a dominant factor.

11

12

Media influence on public opinion.

Strong focus on pensions raises awareness

of need for provision.

Example – Spain.Since 1996, the proportion of reports onthe subject of pensions in the Spanish mediahas increased gradually. The press paysincreased attention to the subject of pen-sions when it forms part of the agenda forpoliticians 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. Themajority of Spanish media reports concernpension plans (PPA – Planes de PensionAsegurados), very few are about actualpension products. (Source: Media Tenor,October 2005).

2001 2002 2003 2004 2005

4 years ago Today80%

60%

40%

20%

0%

% of media coverage on pensions

Worry: Pensions

35%

30%

25%

20%

15%

10%

5%

0%

Source: Media Tenor /Institute for Election Research,

Politbarometer

13

Life Aims I I, 2005: Results – Comparison of countries.

What life aims do people in these countriesreally want to achieve? Who is most satisfiedwith life? And who is financially better pre-pared for the future and old age?

2.1 Life aims: savoir vivre or

good qualifications?

For 80 percent of French people surveyed,“Enjoying life right now” is an important lifeaim, coming in only slightly behind the aimof “Having my own children”. Thus it isprobably no coincidence that France’s birthrate of 1.9 children per woman is higherthan those of the other three countries andthe demographic time bomb is not tickingso loudly here.

In Germany and Italy, by contrast, “Havinga good education” is the life aim mentionedmost often. In Spain, this aim is onlynarrowly beaten into first place by the aimof “Living healthily”. The economic situationand job security seem to be the mainconcern in these three countries, so it is notsurprising that their enjoyment of life isdependent on more tangible life aims suchas owning their own home or livinghealthily.

Although achieving “Financial security forthe future and old age” ranks third amongthe life aims of people in Germany and thusappears to be a greater concern there thanin the other three countries, it is actuallydeemed to be an important life aim by thesame percentage of people living in Spain(78 percent, fifth place) and by even morepeople living in Italy (86 percent, fourthplace). In France, too, a substantial 73 per-cent of people believe that financial securityis important, putting it in fourth place.

In all four countries, financial securityranks first when it comes to the differencebetween the importance of a life aim and

2 Results – Comparison of

countries.

Our perceptions of countries are cliché-ridden.

We say the French and the Southern Europeans know

how to enjoy life, while the Germans are more

concerned with the serious things in life. But what are

people in these countries really like?

the extent to which it has been achieved.Here, there is by far the greatest discrepancyin all four countries.

Life aims.

Having a good education/training.

Living healthily.

Financial security for the future/old age.

Question 3: Now I’d

like to mention several

possible personal life

aims. Please tell me how

important these are to

you.

Question 3a: And to

what extent would you

say you have been able

to achieve this aim so

far?

Germany: 88%

France: 73%

Italy: 88%

Spain: 88%

Germany: 66%

France: 45%

Italy: 43%

Spain: 46%

Germany: 80%

Germany: 72%

France: 74%

France: 60%

Italy: 77%

Italy: 68%

Spain: 73%

Spain: 68%

Germany: 78%

Germany: 34%

France: 73%

France: 32%

Italy: 86%

Italy: 26%

Spain: 78%

Spain: 32%

14

Having my own children.

Enjoying life right now.

All respondents (N = approx. 1,000 each country).

Top 2 boxes

2.2 Satisfaction with life:

Spaniards lead the field.

Life aims and, more specifically, theirachievement are closely related to satisfac-tion with life. The extent to which a lifeaim affects satisfaction, however, dependson the type of aim it is.

There are some life aims which are, formany people, a matter of course, for exam-ple being in a long-term relationship orhaving children. Although achieving theseaims increases satisfaction with life onlymarginally, not achieving them leads to dis-satisfaction.

The opposite is true of the life aims “Finan-cial security for the future and old age”,“Enjoying life right now” and “Career devel-opment”. Achieving these aims has a positiveinfluence on satisfaction.

People living in Spain are more content withlife than those living in the other threecountries, and more of them report animprovement in their satisfaction in the pastfive years.

Satisfaction with life.

Question 1: If you take a look at your life so

far, how satisfied are you in general with your

life?

Question 1a: As you see it, has your satis-

faction with life changed as a whole over the

last five years?

All respondents (N = approx. 1,000 each country).

Top 2 boxes

People in France are the least satisfied withlife. Together with the Germans, theyoccupy last place when it comes to havingseen an improvement in their personalsituation in the last five years. However,Germans take second place when it comesto satisfaction with life so far, just slightlyahead of Italians.

In all four countries, the most importantsource of satisfaction with life is family andfriends, while what makes people most dis-satisfied are political and economic condi-tions and financial security for the futureand old age. The overall result concerningdissatisfaction mirrors that of satisfactionwith these areas of life: the populations ofSpain and Germany are more satisfied withtheir friends and family than those in Italyand France, and they are not as dissatisfiedwith their financial security.

Germany: 75%

Germany: 53%

France: 54%

France: 35%

Italy: 77%

Italy: 42%

Spain: 74%

Spain: 50%

Germany: 52%

France: 42%

Italy: 49%

Spain: 56%

Germany: 32%

France: 32%

Italy: 44%

Spain: 47%

Germany: 75%

Germany: 63%

France: 81%

France: 55%

Italy: 81%

Italy: 59%

Spain: 78%

Spain: 61%

Different countries – different recipes for success?

Observations by Dr. Dennis J. Snower,

President of the Kiel Institute for World Economics

Life Aims I I, 2005: Interview.

15

security in planning and do not requirefurther adjustment five years later on. Thesustainable pension reforms initiated in Italyin 1992 and 1995, which will not be fullycomplete for another 30 years, are an exam-ple of how such security in planning can beprovided. Nevertheless, such long timescalescan result in the sense of urgency beingforgotten.

How can people themselves prepare for these

demographic changes?

First of all, they need to realize that in thefuture they will need to take on muchmore responsibility for their social welfarethan they do now, be it regarding old-ageprovision, healthcare or education. Theywill have to pay out of their own pockets formany of the things which are currentlyfinanced completely or primarily by thestate. This means that many of those in lowincome brackets will have to change theirspending habits and the way in which theyprovide for their financial futures. Increas-ingly, the consumption desires of today willcollide with the financial provision goals oftomorrow.

What role do financial service providers play in

this process?

The privatization of benefits once providedby the state demands more effort from peopleto provide for themselves. Financial serviceproviders can help them to do this. Whilethey may not be able to take over the role ofthe state, they are able to provide peoplewith the financial tools they need to adjustto the new reality. This means that productranges must be adapted to meet these newrequirements. In addition to long-term sav-ings plans for old age, for example, FSPs willhave to offer products which address people’sfinancial needs during periods of educationor training, as well as supplementary healthinsurance schemes. The insurance industryneeds to offer simple, cost-effective productsfor personal provision which enable all citi-zens to secure their own financial futures,even if they are in a low income bracket.

Mr. Snower, the countries where Allianz con-

ducted its survey have very diverse social secu-

rity systems. In your opinion, which country is

best prepared for the demographic change?

That is difficult to say. If you look at thepension systems, then Germany and Italy arecurrently in the best position to solve demo-graphic problems. Spain has yet to introducesustainable reform and France is alsostruggling to do so. The demographic changewill effect healthcare systems in a similarway, yet here all four countries are muchless prepared, hardly any of the necessarygroundwork has been done.

What causes the greatest difficulty in

implementing reforms?

The social security systems are all financedby contributions, which worked well wheneconomies were flourishing and populationswere growing. However, things havechanged since then; we now have weakeconomic growth and aging populations, andthe social security systems are being pushedto their limits. State benefits which wereonce simply the norm need to be reducedand replaced through private initiatives.Politicians, however, find it difficult torenege on their election promises and toreduce benefits, which is why reforms areintroduced slowly, late, or half-heartedly.And the fact that the electorate is skepticalabout these essential reforms makes theprocess even harder.

If there is no way of avoiding reform, then how

should reforms be introduced?

Most importantly, politicians need to becompletely upfront with the electorate andto explain the changes needed to addressthe demographic problem as clearly as theypossibly can. Chopping and changing as wehave with the various pension reforms intro-duced in Germany in the past ten years onlyserves to destroy the confidence of theelectorate completely. Reforms should bedesigned in such a way that they provide

Satisfaction with areas of life.

Your family, your friends and acquaintances.

Your health care.

Your time for leisure and hobbies.

Your financial provision for the future/old age.

Economic conditions.

Political environment.

All respondents (N = approx. 1,000 each country).

Top 2 boxes

2.3 Long-term financial planning

and personal provision.

People in all the countries in the studybelieve that long-term financial planning isimportant, but those in Germany accord itjust a little more importance. None of thefour countries are role models when itcomes to personal provision, unlike Switzer-land and the Netherlands which succeededin making pensions secured by capital stocka mainstay of their social security systemsearly on (see Table 4). In Germany, however,several years of debate in politics and themedia about the Riester pension and the likehave not been completely without effect.

Table 4: Division of retirement income:

Proportion of pension income received from

state pay-as-you-go systems and from

pensions secured by capital stock in Switzerland

and the Netherlands

No less than a third of the German popula-tion believe that however long they live theycan look forward to a financially secureold age. In France, only 17 percent of peoplebelieve that. Furthermore, a significantlyhigher proportion of people living in Ger-many, 35 percent, are satisfied with theirpersonal provision than their counterparts inItaly (16 percent), France (22 percent) andSpain (24 percent).

By contrast, people in Spain are most opti-mistic concerning their personal provision.39 percent of those who have not yetachieved their aim of providing for thefuture and old age believe that they will stillbe able to, while in Germany only 25 per-cent of people believe this (see Table 5).

However, the sobering reality is that in allfour countries, personal provision is in itsinfancy and the majority of respondents seeno reason for satisfaction or optimism.

Switzerland

State pay-as-you-

go system

Pensions secured

by capital stock

Netherlands

42 % 58 %

50 % 50 %

Germany 85 % 15 %

Source: Brugiavini, Aging and Saving in Europe, 2002

Germany: 72%

France: 68%

Italy: 67%

Spain: 79%

Germany: 45%

France: 52%

Italy: 27%

Spain: 47%

Germany: 45%

France: 40%

Italy: 33%

Spain: 41%

Germany: 28%

France: 27%

Italy: 20%

Spain: 28%

Germany: 15%

France: 2%

Italy: 18%

Spain: 22%

Germany: 15%

France: 2%

Germany: 3%

France: 2%

Italy: 4%

Spain: 13%

Germany: 3%

France: 2%

taly: 4%

Spain: 13%

Question 2: Now I’m

going to list some aspects

of your life. Would you

please tell me how satis-

fied you are actually in

each instance?

16

17

Life Aims I I, 2005: Results – Comparison of countries.

Table 5: Issues concerning longevity –

Comparison of countries.

Considering that demographic change isinevitable and the amount of capital cover-age in social security systems insufficient, itis obvious that providing benefits willbecome hugely expensive for governmentsif there is further hesitation on the subjectof reform. As the first Allianz Life Aims studyconducted in Germany in 2004 showed,people significantly underestimate theextent of personal provision necessary.

Although people are now aware of the factthat personal provision is important, they arestill not acting on this knowledge. One rea-son is that many of them simply do not havethe financial means to invest in personalprovision, and another the fact that neitherpolitical reforms of the systems nor theproducts themselves are transparent enough.

In terms of where their priorities lie, how-ever, people are often more concerned withconsumption rather than personal provision.63 percent of people in Germany alreadyforgo some current consumption to providefor the future, and a further 27 percentwould be willing to do so, whereas those inFrance, Italy and Spain are considerablymore reticent.

Willingness to forgo some current consumption.

Question 26: Have you already given up some

things in order to make personal provision for

you future/your old age?

Group: Persons not yet retired

Germany

Long-term financial planning is

(very) important.1

France

62%

49%

Italy 54%

Spain 54%

Germany

I’m (very) convinced that I will still be able

to achieve my personal provision aim.2

France

25 %

23 %

Italy 24 %

Spain 39 %

Germany

However long I live, I have made (very)

good provision.3

France

33 %

17 %

Italy 20 %

Spain 26 %

Germany

I am very satisfied with my current personal

provision arrangements.4

France

35 %

22 %

Italy 16 %

Spain

All respondents (N = approx. 1,000 per country).

Top 2 boxes

1 Question 6b: In your opinion, is long-term financial

planning important for you to achieve your life aims?

2 Question 6: And if you think about the future, how con-

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?

24 % Germany: 63%

France: 36%

Italy: 32%

Spain: 30%

Yes

18

2.4 Expectations of financial

service providers.

People need to feel that they can trust some-one before they will talk to them abouttheir finances, and this is reflected in whatthey want from a financial service provider.Above all, customers want an advisor whothey know well, with whom they can form along-term relationship, who knows their per-sonal situation, and above all, who is willingto listen carefully to them. It is extremelyimportant that the products available aretransparent, but whether or not the advisoralso sells products from other providers orhas the possibility of consulting furtherexperts it is less important. In brief, the mes-sage is clear: Less complexity, more trans-parency and greater customer orientation!In all four countries, people still associatefinancial planning with banks far more thanwith insurance companies, and the expecta-tions of a banking advisor are still slightlyhigher than those of his colleagues in insur-ance. However, this difference can be as little as one or two percentage points.

Factors which influence satisfaction –advice from a bank.

Bank advisor/Insurance advisor listens carefully

to me.

Products are transparent.

I know bank advisor well.

We have been working together for a long time.

Bank advisor/Insurance advisor knows my

personal situation.

Bank advisor/Insurance advisor also advises on

products from other providers.

Bank advisor/Insurance advisor has access to

further experts.

All respondents (N = approx. 1,000 each country). Top 2

boxes. Results for countries as deviations from average

Germany: 65%

Germany: 64%

France: 54%

France: 53%

Italy: 70%

Italy: 67%

Spain: 63%

Spain: 57%

Germany: 75%

France: 56%

Italy: 63%

Spain: 55%

Germany: 76%

France: 60%

Italy: 65%

Spain: 62%

Germany: 55%

Germany: 50%

France: 53%

France: 44%

Italy: 47%

Italy: 40%

Spain: 42%

Spain: 37%

Germany: 52%

Germany: 51%

France: 28%

France: 28%

Italy: 40%

Italy: 39%

Spain: 39%

Spain: 45%

Germany: 52%

Germany: 50%

France: 29%

France: 29%

Italy: 42%

Italy: 40%

Spain: 36%

Spain: 34%

Germany: 63%

Germany: 60%

France: 51%

France: 46%

Italy: 58%

Italy: 56%

Spain: 48%

Spain: 40%

Germany: 68%

Germany: 60%

France: 51%

France: 45%

Italy: 51%

Italy: 47%

Spain: 44%

Spain: 42%

Question 14: When think-

ing about professional

providers such as banks

or insurance companies,

what does your satis-

faction depend on when

you receive advice from

a(n) bank advisor/insur-

ance advisor? Which

aspects are most impor-

tant to you when given

advice?

bank

insurance

19

Life Aims I I, 2005: Results – Comparison of countries.

Summary.

There are many similarities between people’slife aims in the four countries where thestudy was carried out. A good education,financial security for the future and havingtheir own children are among the top fivelife aims in all of the countries. Similarly, ofall the life aims deemed important, financialsecurity for their own futures is the aimwhich the least people have achieved. Whatis most alarming, however, is that not only isthere 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 withtheir lives right now and have also seenthe greatest improvement in their personalsituation in the last five years. People inGermany and Italy, by contrast, are themost critical of how much their lives haveimproved over this time period.

In Germany there is a greater awarenessthan in all the other countries of how impor-tant long-term personal financial planning is.As a result, the willingness of people thereto curb consumption now to provide for thefuture is the highest, hence people in Ger-many are most satisfied with their personalprovision arrangements.

Four years after the introduction of theRiester pension secured by capital stock onJanuary 1, 2002, and after intensive debatein politics and the media, the question is towhat extent the population of Germany haschanged its attitudes to personal provisionand whether or not this change has led tochanges in behavior.

3.1 Life aims: Good education

most frequently cited life aim.

The developments in the labor market areleaving their mark, as 88 percent of Germanssay that “Good qualifications” are their key

3 Results – The situation in

Germany.

In the last two decades, a combination of several

factors has served to significantly change the socio-

economic landscape in Germany, not least German

reunification, which positioned the country in the

middle of an expanding European Union. Many people

are also now worried about the economy and about

the security of their jobs, so even demographic change

and its far-reaching consequences sometimes fade

into the background. Yet it is precisely Germany which

will be particularly affected, since its state pension

scheme is 85 percent funded by current contributions.

20

Burkhard Wilke, Executive and

Scientific Director of the German

Central Institute for Social Issues

When asked to rank twelve different life aims in

order of importance, people in Germany put civic

engagement last! How can that be reconciled with

the belief that Germany is the birthplace of the

concept that it’s “good to belong” to a club or

association and that the Germans donate more to

charity than any other nationality? Well, the second

of these beliefs is most definitely a myth: although

in absolute terms the Germans do give a lot to

charity, in terms of pro-capita giving they are at the

mid to low end of the scale when compared with

other industrialized countries. Moreover, according

to a recent GfK survey, the entirety of all charitable

donations can be attributed to just 28 percent of

the German population. And although it is true

that there is a wealth of clubs and associations in

Germany, some 600,000 officially registered and

several hundred thousand more not registered,

many of these principally exist to serve the leisure

interests of their members. Thus people who

belong to them would hardly see their member-

ship as civil engagement.

Yet perhaps we should look at this response in a

different light: 30 percent of people living in Ger-

many say that civil engagement ranks among their

most important life aims, and 28 percent donate

money to charity. That is a start, at least. Anyone

responsible for a business, a department or an

association knows the rule of thumb: a third of

those involved works actively toward and consid-

ers the common good, a further third jogs along,

and the remaining third has to be more or less

carried by the others. This is actually confirmed by

the most recent survey of voluntary workers

commissioned by the German Ministry for Family

Affairs: in 2004, 36 percent of the population had

been working in some kind of voluntary capacity

for over 14 years, 34 percent were working in a

voluntary capacity at that moment and 30 percent

were not interested in voluntary work. However,

the survey did provide a glimmer of hope, since

hidden amongst the 34 percent of people who are

“co-joggers” are 12 percent who are willing to

remain involved in a voluntary capacity in the long

term.

Our society needs to work hard to mobilize these

silent reserves. The voluntary sector needs to pro-

mote itself as being transparent and willing to

develop, policymakers should remove the red tape

which hinders the voluntary sector, and companies

should not only encourage people to do their bit

for society, but also act as role models. After all, is

it really necessary for every single corporate social

responsibility (CSR) measure to come with a tag

attached detailing how it benefits the company? To

paraphrase John F. Kennedy: Ask not what society

can do for you – ask what you can do for your

society.

Life Aims I I, 2005: Results – The situation in Germany.

life aim. They rank them well above “Beingin a long-term relationship” (80 percent) and“Financial security for the future and oldage” (78 percent). However, their main con-cern seems to be securing a job rather thanhaving a good career, as only 65 percentbelieve that “Career development” is animportant life aim.

There was also an increased awareness ofthe necessity for personal provision, with94 percent of Germans assuming that theythemselves will have to take on responsibil-ity for providing for their futures. Only10 percent consider themselves to be well-informed about political reforms, and only6 percent believe that the reforms of thestate social-security system will leave themadequately provided for in the future.

Thus the aim of “Financial security for thefuture and old age” advanced to third placein the list of Germany’s most important lifeaims with a score of 78 percent. What ismore, since only 34 percent of respondentshave achieved this goal, it is here that thereis by far the greatest discrepancy betweenthe importance of a life aim and its achieve-ment. Only 28 percent of Germans are satis-fied with their financial security, which theyconsider to be a major prerequisite for theachievement of many other life aims such asowning their own homes (79 percent), asecure future and old age (71 percent),discovering the world (71 percent), havinga good education (52 percent) and havingchildren (50 percent).

Importance and achievement of life aims.

All respondents (N = approx. 1,000 each country).

Top 2 boxes

Question 3: Now l’d like to mention several possible

personal life aims. Please tell me how important these

are to you.

Question 3a: And to what extent would you say you

have been able to achieve this aim so far?

Dr. Michael Eilfort,

Managing Director of “Stiftung

Marktwirtschaft”, a market-oriented

economic-policy think tank

“Our pensions are secure” – anyone who still

believes this today probably still believes in Santa

Claus. Faced with massive demographic change,

our social security systems are in no way future-

proof. Not only are the experts aware of this, but

increasingly also the general public.

Anyone who wants to maintain an adequate stan-

dard of living in their old age simply must take out

a personal pension. Yet in Germany there is still a

huge gap between what people know they need to

do and what that actually do. In reality, extremely

few people are making enough personal provision.

The reason for this is that in this country of wealth

redistribution, the state is far too involved in

welfare. If we want people to take on more

responsibility for their own welfare, we must give

them the chance to do this and also allow them to

retain more of their income so that they are in a

position to do it. Since the social security purse is

empty, the only way to do this is for the state to

become less involved in welfare and focus on its

real tasks. That will lead not to a loss in terms of

welfare, but rather to an opportunity to make the

system more dynamic, as well as vastly increasing

freedom.

21

Having a good education/

training

Being in a long-term relationship

Financial security for the future/

old age

Individuality and the ability to

make my own decisions

Having my own children

Enjoying life right now

Living healthily

Career development

Having enough opportunity for leisure

activity and personal hobbies

Owning my own home

Discovering the world – travel abroad

Civic engagement

88%

72%

80%

84%

78%

40%

75%

65%

75%

80%

73%

56%

70%

50%

65%

51%

62%

55%

60%

73%

38%

46%

30%

72%

Well achieved

28%

16%

60%

35%

20%

44%

50%

49%

45%

27%

54%

28%

Poorly achieved

Extent to which achieving the aimsdepends on financial conditions.

All respondents (N = approx. 1,000 each country).

Top 2 boxes

Question 5: You just listed several important aims in your

life. To what degree would you say is the achievement

of these aims also dependent on financial conditions?

Dr. Eugen Buß,

University of Stuttgart-Hohenheim

Germany is in a state of flux: their has been so

much change in societal values in so many areas

that this has led to the formation of completely

new social benchmarks. Trust in state institutions

continues to dwindle and the disparity between

people’s perfectly rational arguments concerning

provision and the opinions of experts is growing.

Health and financial security have become the pri-

mary concerns of people in Germany. They want

to keep what they already have, but expand it just

a little and make it just a little more comfortable,

just a little more select. They value continuity, clar-

ity and security, the more the better. Thus there

is no question of people here suddenly having

lowered their expectations. At the same time,

however, we are seeing a fundamental transition

from a society which prioritized long-term goals to

one which favors short-term ones; people in this

country are now much more concerned with living

in the moment.

As we pass through this period of changing societal

values unique to Germany, however, another new

reality finally becomes clear. We can no longer

depend on the same level of state provision that

people enjoyed in the past, indeed there is an

ever-widening chasm between demands on the

welfare state and the probability of those demands

being met. As a result, people are becoming less

satisfied with life. They value financial security, but

because in the past there was never any need to

make personal provision for one’s own future,

they are unfamiliar with the idea. Here too, there

is an odd ambivalence, on the one hand people

want financial security at all stages of their lives,

but on the other they feel no obligation to take on

any responsibility for achieving this.

Conclusion: The current value profile for people

living in Germany means that financial service

experts must completely redefine their roles. They

must be able to manage a barrage of new value

coordinates such as a) a general loss of trust, b)

prejudices against expert opinion, c) the new

importance accorded to networks based on mutual

benefit, d) the new German “coffee house”

mentality, and e) people’s increasingly emotional

approach to financial services.

The majority of the German population (80 percent) believe that they are personallyresponsible for achieving these aims. How-ever, more people there than in France, Italyand Spain also believe that the economy (39 percent) and policymakers and the state(28 percent) have a certain influence on theachievement of these aims.

People in Germany are more critical whenit comes to the development of socio-eco-nomic conditions which make it possibleto achieve important life aims. 27 percentof people there believe that these condi-tions have improved, but just as many saythat they have deteriorated, which is thesecond most negative figure of all fourcountries. Only in Italy was it slightly higher,at 28 percent.

The Germans are also less optimistic. Only25 percent of those who have not yetachieved their aim of financial securitybelieve that they will still be able to do so.

22

Owning my own house

Financial security for the

future and old age

Discovering the world –

traveling abroad

Having a good education

Having my own children

Enjoying life right now

Career development

Living healthily

Having enough opportunity

for leisure activity and personal

hobbies

Individuality and the ability to

make my own decisions

Being in long-term relationship

Civic engagement

79%

71%

69%

52%

50%

49%

45%

44%

42%

41%

36%

27%

Life Aims I I, 2005: Results – The situation in Germany.

3.2 Satisfaction with life: Satis-

faction depends on achieving life

aims.

A higher percentage of people living inGermany are satisfied with life (52 percent)than are very dissatisfied (only 8 percent);32 percent are more satisfied than they werefive years ago, while 21 percent are less sat-isfied. However, satisfaction with life is to agreat extent contingent on the achievementof personal life aims.

Analysis of the replies revealed that thereare some life aims whose achievement is, ifanything, regarded as a matter of course.Although achieving these aims increasespeople’s satisfaction with life only marginally,not achieving them leads to dissatisfaction.Aims of this type are having a good educa-tion, being in a long-term relationship andhaving children. The opposite is true of thefollowing life aims: financial security for thefuture and old age, the ability to make one’sown decisions, enjoying life right now andcareer development. Achieving these aimshas a positive influence on satisfaction.

The majority of people in Germany are onlyvery content with their family and friends(72 percent). In joint second place, with 45percent each, come health provision andhaving enough opportunity for leisure activ-ity and personal hobbies. By contrast, only28 percent of the population are satisfied

Dr. Markus Rieß,

Spokesman for the Management Board

of Deutscher Investment Trust (dit)

Personal provision is more important today than

ever. Everyone has different objectives and differ-

ent expectations of the risk and return of their

investment, and as the socio-economic climate in

which people plan their lives and finances

changes, they demand more and more flexibility

from their investment. Although investment

funds offer this flexibility and offer broadly-based

portfolios which allow investors to share in the

development of different investment categories

and regions, the proportion of people in Germany

who use them as tools for financial planning is

relatively small. Personal provision plans must take

various factors into account, which is why compre-

hensive, product-independent advice is essential.

A balanced securities portfolio is one that spreads

its assets widely, which means investing in pension

products as well as shares. The latter offer the

potential to develop value significantly, particularly

in the longer term.

with their financial security for the futureand old age. It is in this category that wesee the biggest discrepancy in the surveybetween the three factors: 78 percent ofpeople say that the life aim is important, butonly 34 percent have achieved the aim andonly 28 percent are satisfied with this areaof their lives.

Table 6: Correlation in Germany between actual

financial planning and satisfaction with current

long-term financial plans.

23

I invest at least 10 % of my net income in

personal provision.

I save money through a supplementary health

insurance/supplementary nursing insurance

scheme in case of unexpected illness.

... with my current long-term financial plans.

(Very) satisfied

57 %

51 %

(Very) dissatisfied

14 %

20 %

I have arranged for long-term personal

provision with a financial expert (from

banking, insurance).

55 % 15 %

I know exactly how much money I will have

available when I reach retirement age.

43 % 23 %

Correlation.

All respondents (N = 1,003). Top 2 box and Bottom 3 box

Question 10.1: “How

satisfied are you with

your current long-term

financial plans?”

Question 7: “I would like

to read you a few state-

ments about long-term

financial planning. Can

you tell me which of

these are true for you?”

This impression is confirmed by correlatingthe replies given by individual respondents.Those who said they invest at least 10% oftheir net income in personal provision orwho have drawn up a personal provisionplan with a financial expert are significantlymore often more satisfied (see Table 6).

Worries about old age.

All respondents (N = approx. 1,000 each country).

Top 2 boxes

Question 28: When you think about your future, what

causes you to be most concerned with respect to old age?

In the search for reasons why there is such agreat discrepancy between how importantpeople believe the aim of financial security isand the extent to which this aim has actuallybeen achieved, the survey provides Allianzwith a few answers. A person living inGermany who had an average gross monthly

24

income of 2,500 EUR would have to save165 EUR a month over a period of 25 yearsat an average interest rate of 4 percent tomaintain an average standard of living in oldage. The calculation assumes that thisincome from personal will be in addition tothe state pension, but does not take intoaccount the potential cost of long-termnursing. However, low incomes restrict thefinancial latitude which people need tomake personal provision, especially if theyare young, starting a family or over 50. Onlyaround 30 percent of respondents pay morethan 250 EUR into a personal provisionplan, while just under 20 percent set asidenothing at all. Particularly alarming is thefact that only 25 percent of those who havenot yet achieved their personal-provisiongoals believe they will still be able toachieve them. This is despite the fact that asignificant majority (over 80 percent) of theGerman population is prepared to hold backon consumer spending in favor of personalprovision. Indeed people in Germany are farmore willing to do this than people in anyof the other three countries.

“It’s normal to feel worried about yourfinancial security until you actually getolder, and then you either stop worrying, oryou’re so worried about other things thatit doesn’t seem so bad” is a statement oftenheard from today’s under-40s. Yet given thedemographic time bomb, this is an attitudethat people cannot afford to have.

Dr. Maximilian Zimmerer,

CFO of Allianz Lebensversicherungs-AG

Life expectancy is continually increasing. Com-

bined with other factors, this is pushing our social

security systems to their limits. Many people in

Europe have thus already realized that their state

pension will not be sufficient and that they must

all find a second source of income to ensure an

adequate standard of living in old age. This is the

core competence of life insurance companies, the

only companies that guarantee their customers

lifelong income through a pension scheme. That is

exactly the kind of security people need in their

old age. In addition to providing for their old age,

however, anyone in gainful employment should

think about insuring themselves against occupa-

tional disability. This is not only an issue for those

working in dangerous occupations, since every

second locksmith or painter, every third IT special-

ist and every sixth tax consultant becomes unable

to work in their chosen profession. If this happens,

the state then pays them what is known as general

disability benefit, but only in the worst case, that

is if the person concerned can work less than three

hours a day, and the benefit is only around 31

percent of their gross final salary. Consequently,

private insurance is crucial.

General economic development

in Germany

Health

Environment pollution/

climate change

Change in societal values,

social coldness

Financial provision for family

members and children

Limited mobility

Loneliness

Own financial security

War/terrorist attacks

Accommodation/level of rents

49%

48%

44%

42%

39%

34%

32%

32%

28%

22%

Life Aims I I, 2005: Results – The situation in Germany.

3.3 Long-term financial planning

and personal provision: In their

infancy.

62 percent of the German population nowbelieve that long-term financial planning isextremely important, yet only 28 percentare satisfied with this area of their lives.

Although 50 percent of people living inGermany have at least had the amount ofpension they can expect to receive in retire-ment worked out, according to the Allianzsurvey only 31 percent know exactly howmuch money they will have at their disposal.The reason why people are relatively wellinformed is because one year ago the Ger-man pensions authority began to send everyperson a letter which tells them the amountof state pension they can expect to receiveaccording to current calculations. However,these figures should be treated with care, asthey are based on the assumption that theperson will be in continuous employmentuntil they are 65. Moreover, the plannedpension adjustments of 1.5 and 2.5 percentare too optimistic given the forecast develop-ments in wages and purchasing power.

Only 39 percent of people living in Germanyhave so far drawn up a long-term personalprovision plan with the help of a financialservices specialist, and only 37 percent ofthem invest at least 10 percent of their netincome in personal provision.

By contrast, 27 percent of people say thatthey have not yet made sufficient provisionfor their future, but are at least aware thatthey have to do something. 25 percent haveno extra income to invest in personal provi-sion, while only a fortunate 20 percent needgive the subject no thought because theyhave already made good provision for thefuture.

If they were asked today to pick a product toaddress their personal provision needs,although 66 percent of people living in Ger-many would choose savings accounts andsavings plans, 62 percent would also chooselife insurance and 59 percent a personal pen-sion plan. Joining these as favorites are pro-fessional disability insurance (61 percent),company pension plans (57 percent), supple-mentary nursing care insurance (55 percent)and private health insurance (47 percent).54 percent would select a building loanagreement, 43 percent would choose aninvestment fund, while 28 percent wouldinvest in the stock market themselves. Asregards the Riester pension, which brings upthe rear with a score of only 24 percent, itis quite clear that more work has to be doneto build up confidence and explain how theproduct works.

In terms of their knowledge of and willing-ness to invest in personal provision products,people in Germany are once again ahead ofthose in France, Italy and Spain, since their“Yes” scores are above average for all theproducts mentioned in the survey.

Dr. Ursula Engelen-Kefer,

Deputy Chairperson of the Federation

of German Trade Unions

The main problems dogging social security systems

are the ongoing erosion of the number of em-

ployed persons obligated to pay social insurance,

the fact that it is now normal for people to go

through periods of where they do not work, and

the rising numbers of long-term unemployed. The

very foundation of the social security system has

developed cracks, not because of demographic

development, but because the advent of a more

flexible labor market has changed the employment

structure.

For this reason it is necessary to expand the state

social security systems according to the principle

of citizens insurance (Bürgerversicherung). The

prerequisite for this is a socially fair reform of taxes

and contributions which would reduce the burden

on social security systems. Introducing a tax-

financed allowance for social security contributions

would promote socially-secure employment. There

is also no doubt that a greater degree of personal

provision is needed; we believe that the best way

of facilitating this is by expanding company pen-

sion schemes. However, one thing is clear: we will

only be able to rise to the challenges of the future

if our economy adjusts to demographic develop-

ments through a long-term policy of ensuring

sufficient professional training and organizing

work so that it is open to people of all ages.

25

transparent (65 and 64 percent respectively),the person knows the advisor well (63 and60 percent) and whether the advisor is famil-iar with the customer’s personal situation(55 and 50 percent). Only then does it mat-ter if the advisor can provide access to otherexperts (52 and 50 percent) or sells productsfrom other providers (52 and 51 percent).

Summary.

Over the past five years, there has been littleimprovement in how satisfied people livingin Germany are with their lives. Yet a good50 percent of them are satisfied. Having agood education was the life aim mentionedmost often. Although financial security forthe future and old age was also seen as beingan important life aim, only a few peoplehave managed to achieve this aim so far. Yetprecisely this life aim has a high influenceon satisfaction.

Most people living in Germany believe thatlong-term financial planning is important,but most of them do not plan or makeprovision for the future: one third of thepopulation thus is or will be totally depen-dent on the state pension. Another thingwhich people worry about is the politicaland economic climate.

3.4 Expectations of financial

service providers:

Trust rather than competence?

Trust and competence!

When asked who they trust to advise themon long-term financial planning, people liv-ing in Germany said that they seek the adviceof their long-term partners (51 percent) and families (47 percent) before consulting a personal banking or insurance specialist(37 percent). However, when these repliesare compared with the data on how satisfiedpeople actually are with their financial plan-ning, the professional advisers are ahead ofthe field.

It seems to be no coincidence that peoplerate the competence of their long-termpartners and families higher than that of theprofessionals, as their expectations concern-ing this competence are based on factorswhich professional advisors have evidentlyneglected until now.

Satisfaction with advice from a banking orinsurance advisor is dependent on whetherthe advisor listens attentively (banking: 76 percent, insurance: 75 percent), the rela-tionship is long-term (68 and 60 percentrespectively), the product being offered is

26

Personal environment

Partner/spouse

Family

Friends/colleagues

Bank

My personal bank advisor

My bank

Insurance

My personal insurance

advisor

My insurance company

Miscellaneous

My own research

(e.g. media reports)

Consumer bureaus

Independent financial advisors/

brokers

51%

47%

22%

36%

35%

37%

34%

35%

25%

15%

Rating of professional competence Influence on satisfaction with financial planningSa

tisf

acti

on

wit

h c

urr

ent

lon

g-te

rm f

inan

cial

pla

nn

ing

Satisfaction with professional competence on financial matters.

All respondents (N = approx. 1,000 each country).

Top 2 boxes

Question 13: And from your point of view how would

you rate the professional competence in each instance?

All interviewees (N = approx. 1,000 each country).

Correlation with Question 13

Question 10.1: How satisfied are you with your current

long-term financial planning?

27

Life Aims I I, 2005: Results – Specific target groups in Germany.

Interestingly, however, the different demo-graphic groups sometimes deviate fromthis rule. For example, young adults are thesecond most satisfied group, although theyhave the lowest income and the lowest levelof personal provision. Young families, too,despite having a high level of financialcommitment and little disposable income,and even single parents, are significantlymore satisfied with their lives than singlepeople of any age.

4.1 Young adults (18–25 years).

Young adults aged 18 to 25 rank secondwhen it comes to how satisfied they are withlife (57 percent), yet they are least satisfiedwith their financial security for the futureand old age (16 percent). The majority ofthis group have not yet made any personalprovision (58 percent), and only 12 percentsay that they have made “good provision”.As would be expected, people in this agegroup are more likely to have low incomes,that is less than 1,500 EUR (38 percent),and only 43 percent are working.

However, this low level of satisfaction withfinancial security for the future and oldage shows clearly that even for the youngergeneration a low level of provision is notconsistent with a high level of satisfaction.The younger the respondent, the less theyexpect of the state pension system and themore aware they are of how necessary it isto ensure additional retirement income:whilst over-50s still expect to receive 55percent of their final salary in the form of astate pension, under-30s expect to receiveonly 35 percent.

The reason for this generation being so satis-fied can be put down to the fact that theyare optimistic and they still have plenty oftime to make personal provision. This is

4 Results – Specific target

groups in Germany.

If the results of the study as a whole are summarized,

then Allianz’s second Life Aims study, like the first,

shows that a high level of income often goes hand in

hand with a high level of satisfaction with life, a good

level of personal provision and thus satisfaction at

having achieved the aim of financial security for the

future and old age.

shown clearly when it comes to how confi-dent they are that they will still be able to achieve their aim of financial security: 53 percent of young adults believe that theywill be able to achieve financial security,while only 6 percent of over-50s believe this.

Retirement income – from a statepension or from personal provision?

Group: Employed people

Retirement is a long way off, so what should

young people be doing?

They should be making the most of theconsiderable length of time which they stillhave left, since although they have relativelylittle money available, they are not usuallysupporting a family at this point in their lives.This considerable time period is not onlybeneficial because it means young peoplehave more time to save, but also because it

Up to 29 years 30 to 49 years 50 years and older

80%

60%

40%

20%

0%

Question 7.1: What do

you think: What percent-

age of your salary will

you receive as a state

pension?

Question 7.2: Besides

your state pension,

will you have any addi-

tional income during

retirement?

Expected percentage of

final salary to be received

as a state pension.

Percentage of people

who will have an addi-

tional income during

retirement.

allows them to invest in higher risk and thushigher return investments such as stocks andinvestment funds. Relevant information andexplanations should be provided at schoolsand further education establishments, andthe government should provide pension sub-sidies as an incentive as early on as possible.

People in their early twenties have probablygiven hardly a thought to their pensionarrangements. That is understandable, asthey are concentrating on completely differ-ent issues such as planning their studies and

career, starting work or buying their firstproperty. Quite apart from that, retirement isa long way off. All true, yet it is exactly thislong period of time which is of such benefitwhen it comes to investing in personalprovision. This is because over 45 years, itis not only possible to earn a great deal ofinterest, but also to invest in higher riskinvestments which offer even higher rates ofreturn. For example, if someone invests just25 EUR a month in a share-based invest-ment fund with an annual rate of return of6 percent, then after 45 years they will

Manfred Weber, MEP

State Chairperson of the Young Union

of Bavaria

Our social security systems are urgently in need of

reform. The Young Union of Bavaria thus supports

broadly-based reform rather than short-term cor-

rective measures. The young people of today are

caught in a cleft stick, paying a high level of contri-

butions into the social security system although

they can only expect an inadequate level of cover

in times of need or in old age. This is unfair and

is a subject of concern for young people. For

example, it is evident that today’s 30-year-olds will

receive nothing from the nursing care insurance

schemes that they are currently paying into.

Policymakers and the state must come to the

sobering conclusion that as social security systems

become increasingly ineffective, they need to be

less involved in them. Their emphatic message

should be less state involvement and more indi-

vidual responsibility.

Yet the young generation will only become com-

pletely aware of the precarious situation they are

in if policymakers are brave enough to be more

honest with them. Today’s government must be

brutally honest about the fact that the social secu-

rity system is in dire financial straits. Only when

we have achieved a greater degree of credibility

will young people summon up the courage to

stand on their own two feet and provide for their

own futures.

Tobias Kemnitzer,

Director of the German Foundation for

the Rights of Future Generations

To put it briefly but not too briefly, justice for all

generations means that young people today as

well as future generations should have the same

opportunity to satisfy their needs as the genera-

tions which came before them. However, the likeli-

hood of the current generation of “thirty-some-

things” receiving what they need from the state

pension system is small. Confronted with demands

from all directions, we currently feel a little as

though we are in the “rush hour” of life with no

idea if and when this will end: we are expected to

start a family, need to get a foothold on the career

ladder in order to be able to save any money at all,

and at the same time, as the role models of the

new society where people take over responsibility

for their own welfare, should plan at last 30 years

into the future. For many of us, that is simply too

much to expect.

28

Not without reason is the demand for personal

provision products relatively low despite the high

awareness of how important they are. The huge

range of products, from investment funds to the

Riester pension, is more confusing and less trans-

parent than if we were trying to work out what was

the best cell-phone contract to choose. And unlike

a cell-phone contract, this decision is binding

for the rest of our lives. What has happened to

transparency and reliability?

With its Riester pension, the government is show-

ing us exactly how not to go about solving the

problem. Instead of setting standards which poten-

tial investors can easily understand and compare,

for example by introducing a certification system,

the introduction of this supplementary pension

secured by capital stock has caused great confu-

sion. This has ultimately led to people being less

dependent on the competence of pension policy-

makers, but even more dependent on the compe-

tence and goodwill of their advisors. And of course

these advisors are often primarily interested in

swiftly concluding a contract.

have amassed almost 70,000 EUR, only13,500 EUR of which they have actuallycontributed out of their own income:the rest comes from reinvesting the shareincome.

4.2 From people starting a family

to the “sandwich generation”.

According to Allianz’s Life Aims II study,people starting a family are by far the mostsatisfied people in Germany. Although

they usually only have an average income(71 percent earn between 1,501 and4,000 EUR) and rarely a high income(10 percent earn over 4,001 EUR), or fixedassets of over 10,000 EUR (56 percent donot), they are more likely than others tomake personal provision (63 percent), and28 percent even say they are making goodprovision for the future. Correspondingly,when it comes to satisfaction with financialsecurity, they are in second place, justbehind early retirees. By contrast, theyoccupy first place when it comes to dissatis-

Malte Spitz

Executive Committee of Green Youth

The Life Aims II study shows that people in Ger-

many now also believe that a good education

is paramount and should be available to all. The

fact that the German education system is not in

a position to deliver equal opportunity of access to

education is thus all the more alarming.

This should be the main task of any parliament

which believes in justice, allowing individual

freedom and allowing individuals to achieve their

goals.

It is scandalous that there is such a chasm between

the desires of the population and the very real

deficit on the one hand and the inactivity of politi-

cians, particularly at federal state level, on the

other.

Erecting financial access barriers such as study or

childcare levies is not the right way to get more

money into the education system, since these are

simply a further hindrance to precisely those social

classes which already have problems accessing

these institutions.

It is already evident from the trends in the federal

states that this accessibility gap will continue to

influence young people’s decisions for or against

studying. And the experience of other countries

worldwide shows us that private sector student

loans and grant systems will change little. Instead,

it is a central task of the state, and thus also of

society, to finance an education system which is

accessible to everyone, from their early childhood

to when they go to university or begin work.

Johannes Vogel

National Chairperson of the

Young Liberals

The realization that despite all the reforms dis-

cussed and implemented so far, the state pension

will not be sufficient to support people in their old

age seems to have finally dawned on the popula-

tion. For 94 percent of them the solution is clear:

more personal provision is needed. For that rea-

son, policymakers should finally dare to take the

radical step of beginning the gradual transition to

a pension system fully secured by capital stock,

whilst making personal provision compulsory.

This would indeed be a double burden for young

people, who would need to meet the existing

pension claims of those in the generations above

them as well as to invest in their own personal

provision. A convincing argument for it, however,

is the fact that as each day without reform passes

and the demographic imbalance increases, so

does the unavoidable burden of transition to such

a system. Also, an 80 percent majority of people

living in Germany is prepared to curb consumer

spending a little in order to invest in personal

provision. So policymakers just need to be brave

enough to explain that far-reaching reform is

necessary!

29

People starting a family often find them-selves in a difficult situation (see box onthe “rush hour of life”). After the birth oftheir first child, they usually only have oneincome, but at the same time living costsand the extent of necessary personal provi-sion rise. This is the start of a stage in theirlives which usually lasts for two decades ormore, incorporates them buying their firsthome and ends with financing the children’sstudies. Moreover, as the average age offirst-time parents rises and their own parentslive longer, more and more families are con-fronted with the challenge of financing notonly their own lives and personal provision,but also their children’s studies and the careof their parents. Often only a few years from

faction with economic conditions (all thedemographic groups are similarly dissatisfiedwith the political climate).

Satisfaction at different stages of life.

Philipp Mißfelder, National Chairperson

of the Young Union

The Allianz Life Aims II study shows that people

in Germany realize that it is necessary to make

personal provision for old age, but are currently

not in a position to be confident in their own

ability to make this provision. Consequently, they

do not believe they will be able to achieve their

life aim of providing for old age, something which

is made even harder by the fact that the financial

latitude for this is decreasing.

Reforms of the pension system must therefore

recreate confidence by setting a clear course on

the one hand, and increase people’s financial

latitude by reducing state demands on their

income on the other. Both these things can only

be achieved and the demographic time bomb

defused if the current pay-as-you-go scheme is

supplemented with capital-secured products.

Nursing care insurance must be moved into the

private sector, some aspects of health insurance

secured by capital stock and greater emphasis

placed on personal provision for old age. In addi-

tion, there must be a comprehensive tax reform

which simplifies tax law and leaves people more of

their income, thus reducing the burden on them

so that they can achieve their goal of old-age

provision.

Björn Böhning, National Chairperson of

the SPD Young Socialists

The typical employment history of a young person

has changed radically in the last few years.

Although youth unemployment in Germany is

relatively low, the traditional progression through

working life is now further and further from reality.

Unpaid internships and further training, part-time

jobs and periods of unemployment are now

common features on people’s resumes, regardless

of what qualifications they have. Young people

are accepting the demands of flexibility, partly

because they have to and partly because they

reflect their own expectations of working in the

modern world.

30

Under these conditions, however, a system based

purely on personal provision for the risks of old

age is almost impossible, especially when we con-

sider that young people potentially also face the

financial burden of starting a family. Only a small

number of our generation will manage to make

up the deficit in provision at a later stage of their

life and only then is that possible of they curb

consumption considerably, which has an obvious

knock-on effect on domestic demand.

Consequently, the collective security provided by

the social security systems will remain crucial,

even in the future. The Scandinavian states prove

that a high level of security provided by the state

encourages innovation, flexibility and economic

prosperity, and is thus truly fair to all generations.

Overall satisfaction

with life

Satisfaction with long-

term financial security

Satisfaction with

political environment

Satisfaction with

economic conditions

Young

adults

Singles /

DINKs

People

starting a

family

Families Early

retirees

80%

60%

40%

20%

0%

pension age themselves, they have becomethe “sandwich generation”.

Single parents are in an even more difficultsituation. In contrast to those starting afamily (19 percent) and young families (9 percent), significantly more single parents(48 percent) have to survive on a lowmonthly income (less than 1,500 EUR).Due to these adverse conditions, more thanhalf of them (53 percent) do not make anypersonal provision.

4.3 50-plus generation.

Over half the 50-plus generation is satisfiedwith life, and a surprising 33 percent are sat-isfied with their financial security, which issignificantly more than the figure for 30 to49 year-olds (28 percent) and 18 to 29 year-olds (16 percent). 23 percent of over-50shave only made a little personal provisionand 48 percent absolutely no provision, butat least this generation expects to receive astate pension of 55 percent of their finalsalary.

Dr. Matthias Meyer,

Head of the Church and Social Policy

Department at the Secretariat of the

German Bishops’ Conference, Bonn

For several years now, policymakers have been

following the same pattern, according priority to

the here and now rather than to the future, to

what we have rather than to what is necessary, to

the interests of today rather than the interests of

tomorrow. Issues which are influential and can be

well organized always win through against those

which are difficult to organize but are particularly

in need of support. This is illustrated particularly

well by the way that public debt is being allowed

to accrue unchecked at the cost of future genera-

tions, as well as the systematic way in which

families with children are being put at a disadvan-

tage, for example in the world of work or terms

of pension arrangements. Having children is being

made economically unattractive.

The result is that our country has fewer and fewer

children. This cannot be allowed to happen,

because a society without children is a society

without a future. Old-age provision without follow-

ing generations is not possible, even if it is secured

by capital stock. Moreover, in a knowledge-based

economy like ours, children must receive the best

possible education and qualifications, yet our edu-

cation system is not achieving this, especially as

regards those children who have already had an

unfavorable start in life. Significantly more effort

must be made in this area in order to improve all

children’s chances of a good education.

We need a society which has the courage to have

children. One of the central tasks of policymakers

and all community groups is thus to support and

strengthen families, because our futures start with

our children.

Brunhilde Raiser

President of the National Council of

German Women’s Organizations

For decades, the National Council of German

Women’s Organizations has been demanding an

independent and secure existence for women,

both during their working lives and thereafter. The

two are interconnected, as old-age provision must

be funded from working income.

Reforms of the social security systems which

guarantee that women will be provided for equally

as well as men affect all areas of society. The labor

market must give women the same opportunities

as men to take on gainful employment. Child care

of a high level must provided for all, so that chil-

dren can grow up with children and parents have

time to work. Women must also be given the same

salary and promotion opportunities as men –

currently women in Germany earn approximately

30 percent less than men for doing the same work

and rarely reach management positions.

As private insurance becomes more and more

important, it is urgent that women are offered

policies which do not have premiums 15 percent

above those paid by men simply because women

are expected to live longer.

31

32

The rush hour of life.

People starting a family are right in the middleof the rush hour of life. In their professionallives they are laying the foundations of theirfuture careers, while in their private liveshaving children may be accompanied by thepurchase of their first home, which demandslong-term financial obligations. Yet at thispoint in their lives at the latest, they need to begin making personal provision for oldage. When doing so they should make fulluse of the state support available, just asthey do when buying a home, and theyshould also make a long-term savings plan.Property is an important component of old-age provision. The Riester pension is a fur-ther basic element. By making full use ofbasic and child subsidies, it is possible toachieve a subsidy level of roughly 30 per-cent. Investing just 100 EUR per month inthe Riester pension would result in amonthly income of just under 400 EUReach for both father and mother from theage of 65.

However, at this age, those who have notachieved their aims of financial securityare less likely to believe that they will doso (6 percent compared to 53 percent of 18 –29 year-olds).

What is very difficult at this age is the situa-tion for single parents. Of all respondents,they receive the lowest income (62 percentof them receive less than 1,500 EUR amonth) and thus have almost no possibilityof doing anything more towards theirpersonal provision.

Level of provision achieved at differentstages of life.

Those who are already retired have littlefinancial latitude and are heavily dependenton the state pension, as 90 percent of themhave made absolutely no personal provisionfor old age.

Young

adults

Singles /

DINKs

People

starting a

family

Families Early

retirees

100%

80%

60%

40%

20%

0%

Good level of provision

Some provision

No private financial provision

33

Life Aims I I, 2005: Appendix.

This Allianz “Life Aims” study focused onthe issues surrounding people’s personalobjectives in life, their satisfaction with lifeand their financial security at differentstages of their lives. The objective of thestudy was to investigate the similarities anddifferences in these areas between peopleliving in the four countries Germany,France, Italy and Spain.

I.1 Methodological approach.

In order to collect the life aims data, a stan-dardized questionnaire was used to carryout computer-assisted telephone interviews(CATI) in the four countries Germany,France, Italy and Spain. The universe chosenfor the study was people aged 18 to 75 livingin private households who spoke the nativelanguage of the country concerned. Toensure statistically-accurate statements, ineach country a representative sample ofat least 1,000 people was chosen. Thesampling method used was comparable ineach country, and is described here usingGermany as an example.

The basis for the survey in Germany was theADM telephone sampling method developedby the Working Group of the Federationof German Market and Social ResearchInstitutes (ADM). In Germany, the ADMtelephone sampling method is the best wayof using random digital dialing (RDD),which itself ensures the necessary random-ness of samples. ADM-RDD numbers aregenerated by removing the last two digits oflisted telephone numbers and replacingthese with all 100 possible pairs of digits.The digits in the newly generated numbersare then put into a random order. A so-called 100 block will thus contain unlistednumbers and numbers which do not exist.

This provides a basis of telephone numberswhich in principle allows every landline inGermany to be accessed. Non-existentnumbers are included as neutral results andas such do not create a problem.

Ideally, representative surveys are carriedout using stratified random sampling, wherea sampling allocation plan stipulates howmany interviews should be carried out withpeople representative of different strata (e.g. federal state, size of municipality, age,gender, household income), so as to avoid asfar as possible systematic biases within thesample. This method was used in the LifeAims II study to ensure a representative dis-tribution of the interviews over the differentstrata.

Project design and implementation.

The Nuremberg-based market research insti-tute GfK was commissioned with the designand implementation of the survey and thesubsequent data analysis. As the largest mar-ket research institute in Germany and thefourth largest in Europe, GfK has a networkof national institutes and can thus guaranteehigh-quality data collection of comparablequality in all countries. GfK assisted Allianzin creating the questionnaire, which wasthen subjected to a pre-test in all four coun-tries to determine its suitability in the field.The survey itself was carried out betweenJune 15 and August 5, 2005, with eachinterview lasting an average of 30 minutes.

I Study objectives

and methodology.

34

Table 7: Data collection. Number of interviews

per country and period.

I.2 Rating scale used.

The respondents were asked to rank theiranswers on a scale from 1 to 7, where 1 cor-responded to “Does not apply at all” and 7to “Applies 100 %”. For the purposes of dataanalysis, the scale values were combinedinto three boxes. The top box, “Applies”,contains values 6 and 7, the middle box,“Indifferent”, the values 4 and 5, and thelow box, “Does not apply”, the values 1, 2and 3 (see Illustration 1: Data collection.Scale used).

Illustration 1: Data collection. Scale used.

Please rank your answer on a scale of 1 to 7,

where 1 means “Does not apply at all” and 7

means “Applies 100 %”

I.3 Type of analysis used.

In addition to purely descriptive analysis,regression analysis was used. Regressionanalysis examines the type of relationshipbetween two variables, the objective beingto predict the value of one dependentvariable as a function of one or more inde-pendent variables.

Germany

Number of

interviews

Period

France

n = 1,003 15 June –19 July 2005

n = 1,000 27 June –11 July 2005

Italy n = 1,001 04 June –19 July 2005

Spain n = 1,000 04 June –05 Aug 2005

In the “Life Aims” project, the variable“Satisfaction with life” can be regarded as adependent variable. Satisfaction with lifecan be dependent on various factors, forexample satisfaction with

• family, friends and acquaintances,• financial security in the future and old age,• health care,• the political climate,• the economic climate,• opportunity for leisure activity and hobbies,• or the net household income.

Regression analysis examines whether theseindependent variables influence the depen-dent variable “Satisfaction with life”.

Procedure.

The data from two variables, e.g. “Satisfac-tion with life” and “Satisfaction with finan-cial security for the future and old age”,are measured for each person. Regressionanalysis then serves as a tool to investigatethe correlation between these two charac-teristics.

Once information on the two characteristics“Satisfaction with life” and “Satisfactionwith financial security for the future and oldage” has been collected, this is plotted forall of the individuals in the sample using ascatter diagram. Each point on the diagramrepresents an individual in the sample. Thescatter diagram can have various differentforms and gives the first indication of thetype of relationship (see Illustration 2:Different scatter diagrams).

In the next step, the clusters are describedusing the most relevant mathematical func-tion. If the cluster indicates a relationship,then the strength and type of this relation-ship is of interest. Diagram A suggests alinear relationship, as the cluster can bedescribed well by a line. Diagram C indi-cates a quadratic relationship, while diagramB indicates no relationship between the twocharacteristics shown.

Low Box (1–3) Middle Box (4–5) Top Box (6–7)

“Does not apply“ “Indifferent“ “Applies“

Does not apply at all Applies 100%

1 2 3 4 5 6 7

Illustration 2: Different scatter diagrams.

35

Life Aims I I, 2005: Appendix.

A mathematical formula is then used tocalculate the regression line which best fitsthe cluster, determine its slope and at whatpoint it intercepts the y axis. The aim hereis to achieve an optimal fit between theregression line and the data points. Thusthe regression line is an indicator of therelationship between characteristic X (Satisfaction with financial security) andcharacteristic Y (Satisfaction with life).

In addition to the regression line, anothermeasure is also calculated to determine thequality of the regression model. This is thecoefficient of determination, which showshow well the individual data points fit tothe line of regression. The coefficient ofdetermination is always between 0 and 1,and the closer the value is to 1, the betterthe quality of the regression model. Basi-cally, it can be said that values of 0.5 andabove show a stable model with very validdata. A coefficient of determination of 0.59was a achieved for the data collected inGermany for the Life Aims II study.

Summary.

With the help of regression analysis, it ispossible to discover how strong the influ-ence of one or more independent variablesis on one dependent variable. With regardto life aims, it is thus possible to determinewhich independent variables have thegreatest influence on satisfaction with lifeand which have little or no influence.

Sati

sfac

tio

n w

ith

lif

e

Satisfaction with financial securitya

Sati

sfac

tio

n w

ith

lif

e

Satisfaction with financial securityb

Sati

sfac

tio

n w

ith

lif

e

Satisfaction with financial securityc

36

II.1 Demographic development.

Table 8: Total population (mean)

today and 2050.

Table 9: Life expectancy of men and women

(years) today and 1960.

Table 10: Dependency ratio today and 2050:

Number of people aged 65 and over

per 100 people aged 15–64 (people of

working age).

Table 11: Children per woman

(reproduction rate) 1965 and 2004.

II.2 Economic situation.

• Germany: In the last 10 years economicgrowth has been significantly slower thanin the other EU states.

• France: The economy has picked up since2003 but high unemployment is a significantproblem.

• Italy: Economic growth is slower than theEU average, unemployment is relativelyhigh, and public debt is high.

• Spain: Economic growth is strong and abovethe EU average (thanks to private demand),yet unemployment is high.

Table 12: Macro-economic ratios for all

countries.

II Macro-economic data for the

four countries Germany, France,

Italy and Spain.

Germany

in million 2005 2050

France

82.9 75.1

60.6 64.0

Italy 58.2 52.3

Spain

Source: National statistics offices

42.9 53.2

Germany

1965 2004

France

2.5 1.3

2.8 1.9

Italy 2.7 1.3

Spain

Source: National statistics offices

2.9 1.2

Germany

2005 2050

France

28.5 51.0

25.0 51.4

Italy 29.7 63.2

Spain

Source: National statistics offices

24.5 55.1

Germany

in years Men Women

1960

Men Women

2005

France

66.9

66.9

72.4

73.6

75.6

76.7

81.3

83.8

67.2 72.3 77.8 83.7

67.4 72.2 77.7 84.0

Italy

Spain

Source: National statistics offices

Germany

GDP growth 2005 (real).

France

1.0

1.6

Italy – 0.1

Spain 3.3

37

Life Aims I I, 2005: Appendix.

II.3 Social security systems:

Organization of pension

systems.

Germany.• 3-pillar system (state pension, company

pension, personal pension)• State pension: compulsory pension scheme

financed by pay-as-you-go tax contributions• Various reforms intended to stabilize

the financial situation: 2004 suspension of pensions adjustment, basic pension(Rürup pension)

• Personal pension plans: Riester, basic pension

• 5 ways of organizing pensions throughcompanies

France.• 3-pillar system (state pension, company

pension, personal pension)• State pension: compulsory pension scheme

financed by pay-as-you-go tax contributions• Company pension schemes: ARRCO, AGIRC• 2004: introduction of individual retirement

savings plans, e.g. PERCO, an importantpension product

• No reforms planned in the immediate future

Italy.• 3-pillar system (state pension, company

pension, personal pension)• State pension: compulsory pension scheme

financed by pay-as-you-go tax contributions• Second and third pillars not currently well

developed• Reforms have been planned but not imple-

mented for years, current further delay inimplementation, due in Autumn 2005

Spain.• 3-pillar system (state pension, company

pension, personal pension)• State pension: compulsory pension scheme

financed by pay-as-you-go tax contributions• Company and personal pensions rare• No debate on pension reforms (despite

evidence that population is aging)

Germany

Disposable income of private households

per capita 2004 (in EUR).

France

16,700

16,300

Italy 15,400

Spain 11,900

Germany

Unemployment rate 2005 (EU definition).

France

9.6 %

9.6 %

Italy 7.7 %

Spain 9.4 %

Germany

Amount of tax paid.

France

21.5 %

27.7 %

Italy 30.1 %

Spain 23.0 %

Germany

Amount of tax paid plus contributions.

France

36.0 %

44.0 %

Italy 42.6 %

Spain 35.6 %

Germany

Home ownership rate 2004.

France

43 %

57 %

Italy 73 %

Spain 87 %

38

Having a good education/training.

Living healthily.

Financial security for the future/old age.

Having my own children.

III.1 Results – Comparison of countries.

Enjoying life right now.

Owning my own home.

Being in a long-term relationship.

Individuality and the ability to make my

own decisions.

III Survey results.

Personal life aims.

Germany: 88%

France: 73%

Italy: 88%

Spain: 88%

Germany: 66%

France: 45%

Italy: 43%

Spain: 46%

Germany: 70%

Germany: 39%

France: 74%

France: 44%

Italy: 88%

Italy: 44%

Spain: 91%

Spain: 53%

Germany: 78%

Germany: 34%

France: 73%

France: 32%

Italy: 86%

Italy: 26%

Spain: 78%

Spain: 32%

Germany: 73%

Germany: 47%

France: 80%

France: 43%

Italy: 79%

Italy: 32%

Spain: 82%

Spain: 45%

Germany: 60%

Germany: 51%

France: 74%

France: 57%

Italy: 87%

Italy: 65%

Spain: 86%

Spain: 66%

Germany: 80%

Germany: 72%

France: 74%

France: 60%

Italy: 77%

Italy: 68%

Spain: 73%

Spain: 68%

Germany: 75%

Germany: 53%

France: 54%

France: 35%

Italy: 77%

Italy: 42%

Spain: 74%

Spain: 50%

Germany: 75%

Germany: 63%

France: 81%

France: 55%

Italy: 81%

Italy: 59%

Spain: 78%

Spain: 61%

Question 3: Now l’d

like to mention several

possible personal life

aims. Please tell me how

important these are to

you.

Question 3a: And to

what extent would you

say you have been able

to achieve this aim so far?

39

Life Aims I I, 2005: Appendix.

Career development.

Having enough opportunity for leisure activity

and personal hobbies.

Discovering the world – travel abroad.

Civic engagement.

All respondents (N = approx. 1,000 each country).

Top 2 boxes

Financial security for the future and old age is the life aim

where there is by far the greatest discrepancy between

importance and achievement.

Germany: 65%

Germany: 41%

France: 62%

France: 33%

Italy: 76%

Italy: 33%

Spain: 77%

Spain: 34%

Germany: 62%

Germany: 41%

France: 63%

France: 35%

Italy: 65%

Italy: 29%

Spain: 75%

Spain: 43%

Germany: 38%

Germany: 24%

France: 44%

France: 20%

Italy: 63%

Italy: 17%

Spain: 47%

Spain: 20%

Germany: 30%

Germany: 28%

France: 34%

France: 24%

Italy: 66%

Italy: 25%

Spain: 32%

Spain: 22%

40

Life aims.

Having a good education, financial security and having one’s

own children are some of the most important life aims.

Europe Germany France Italy Spain

Having a good education/training1 6 1 2

Living healthily7 3 1 1

Financial security for the future/

old age3 6 4 5

Having my own children5 1 5 5

Enjoying life right now6 2 6 4

Owning my own home10 3 3 3

Being in a long-term relationship2 3 7 10

Individuality and the ability to

make my own decisions4 10 7 9

Career development8 9 9 7

Having enough opportunity for lei-

sure activity and personal hobbies9 8 11 8

Discovering the world –

travel abroad11 11 12 11

Civic engagement12 12 10 12

84%

81%

79%

79%

78%

77%

76%

70%

70%

66%

48%

41%

Question 3: Now l’d

like to mention several

possible personal life

aims. Please tell me how

important these are to

you.

Top box (6+7)

41

Life Aims I I, 2005: Appendix.

Factors which influence the achievement

of life aims.

In Germany, the expectations of the state are higher than in

France or Spain, where friends and acquaintances have more

influence.

You personally.

Family.

Your employer.

Economy.

Politics/government.

Friends/acquaintances.

Germany: 80%

France: 71%

Italy: 75%

Spain: 80%

Germany: 55%

France: 57%

Italy: 59%

Spain: 63%

Germany: 28%

France: 12%

Italy: 25%

Spain: 15%

Germany: 23%

France: 36%

Italy: 27%

Spain: 36%

Germany: 40%

France: 29%

Italy: 35%

Spain: 43%

Germany: 39%

France: 28%

Italy: 44%

Spain: 48%

Question 4: To what

extent would you say the

achievement of your

aims depends on the

following persons and/or

institutions?

42

Satisfaction with life.

People in Spain are most satisfied with their lives, followed by

people by people in Germany.

Germany

France

Italy

Spain

52%

42%

49%

56%

40%

51%

44%

37%

8%

7%

7%

7%

Very satisfied Very dissatisfied

Question 1: If you take a

look at your life so far,

how satisfied are you in

general with your life?

Top box (6+7)

Middle box (4+5)

Low box (1–3)

43

Life Aims I I, 2005: Appendix.

Question 28: When you

think about your future,

what causes you to be

most concerned with

respect to old age?

Worries about old age.

Own health/illnesses.

Environmental pollution/climate change.

Financial provision for family members

and children.

General economic development.

Germany: 48%

France: 45%

Italy: 63%

Spain: 84%

Europe: 60%

Germany: 44%

France: 55%

Italy: 62%

Spain: 74%

Europe: 59%

Germany: 39%

France: 53%

Italy: 59%

Spain: 69%

Europe: 55%

Germany: 49%

France: 46%

Italy: 53%

Spain: 65%

Europe: 54%

Top box (6+7)

44

People’s key concerns are their own health and environ-

mental pollution/climate change. People in Spain worry most.

Own financial security.

Accommodation/level of rents.

Germany: 32%

France: 38%

Italy: 43%

Spain: 63%

Europe: 44%

Germany: 22%

France: 24%

Italy: 28%

Spain: 55%

Europe: 32%

Change in societal values, social coldness.

Limited mobility.

War/terrorist attacks.

Loneliness (in old age).

Germany: 42%

France: 46%

Italy: 56%

Spain: 62%

Europe: 51%

Germany: 34%

France: 45%

Italy: 49%

Spain: 76%

Europe: 51%

Germany: 28%

France: 36%

Italy: 58%

Spain: 64%

Europe: 46%

Germany: 32%

France: 38%

Italy: 47%

Spain: 62%

Europe: 45%

45

A third of the German population believe that they have

provided well for the future, however long they may live.

Financial provision for a long life.

I have made (very) good provision.

Germany: 33%

France: 17%

Italy: 20%

Spain: 26%

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 pro-

vision for your retirement.

Do you think that you

have already made good

provision for living

longer?

Top box (6+7)

46

Willingness to give up some consumer

expenditure to provide for the provision.

More people in Germany than anywhere else forgo consumer

expenditure to make personal provision.

Have you already given up some current

consumption?

Would you be prepared to forgo some current

consumption?

Germany 63%

France 36%

Italy 32%

Spain 30%

Yes

27%

16%

15%

20%

30%

33%

36%

29%

43%

51%

49%

51%

Yes, I would be totally

prepared to do so

No, I would not be at all

prepared to do so

6%

%

%

Question 26: Have you

already given up some

things in order to make

personal provision for

your future/your old age?

Question 24: In principle,

would you be prepared

to forgo some current

consumption to provide

for the future (i. e. your

expenditure on living

expenses, leisure time,

hobbies and vacations)?

Group:

Not yet retired.

Top box (6+7)

Middle box (4+5)

Low box (1–3)

47

Taking precautions

I regularly put a little money away for emergencies.

I have supplementary nursing insurance/supplementary

health insurance in case of unexpected illness.*

I have arranged long-term personal provision with a

financial expert (from banking, insurance).

Every month I invest at least 10% of my net income in

my personal provision.

Every month I save a certain amount for purchases

and travel.

Germany France Italy Spain

0% 10% 20% 30% 40% 50% 60% 70%

* Due to special situation

in France, where state

pensions exist but

benefits are limited.

There are obvious differences between the four countries as

regards long-term financial planning …

Long-term financial planning.

Question 7: Now I would

like to read you a few

statements about long-

term financial planning.

Can you tell me which of

these are true for you?

Top box (6+7)

48

… and people in Germany have made the highest level of

personal provision.

Long-term financial planning.

Informed

I have already had someone calculate my state pension.

I know exactly how much money I will have available when

I reach retirement age.

Not taking precautions

I have not yet made sufficient provision for old age, but I

know I should do something about that.

Right now, I can only just survive on my income, so I have no

way of contributing to a personal provision plan.

I'm not concerned about my situation when I reach retire-

ment age because I have already made good provision

for the future.0% 10% 20% 30% 40% 50% 60% 70%

Germany France Italy Spain

Question 7: Now I would

like to read you a few

statements about long-

term financial planning.

Can you tell me which of

these are true for you?

Top box (6+7)

49

Financial products for personal provision.

Insurance.

Life insurance (incl. term life insurance).

Occupational disability insurance.

Personal pension.

Company pension.

Supplementary nursing insurance.

Private health insurance.

Riester pension.

Individual pension saving plans.

Guaranteed private provision plan.

Question 9: If you were

asked today to choose

financial products for

personal provision, which

of the following financial

products would you

choose to provide for

your future?

Basis: n = excluding

“Not sure” answers.

Germany: 62%

France: 60%

Italy: 53%

Spain: 31%

Germany: 47%

France: 31%

Italy: 38%

Spain: 21%

Germany: 24%

Spain: 41%

Spain: 14%

Germany: 61%

France: 31%

Italy: 32%

Spain: 24%

Germany: 59%

France: 47%

Italy: 40%

Spain: 26%

Germany 57%

France: 26%

Italy: 33%

Spain: 23%

Germany: 55%

France: 67%

Italy: 34%

Spain: 12%%

50

Financial investments.

Financial investment (e. g. savings plans,

savings account)

Investment funds.

Stocks/shares.

Building loan agreement.

Germany: 66%

France: 67%

Italy: 58%

Spain: 30%

Germany: 43%

France: 26%

Italy: 40%

Spain: 23%

Germany: 28%

France: 30%

Itay: 20%

Spain: 14%

Germany: 54%

France: 54%

Spain: 18%

Old-age provision: Insurance and pension schemes dominate –

investment funds and stocks/shares still play a less significant

role.

51

III.2 Results – Germany.

Personal life aims and degree of achievement.

Financial security for the future/old age is the aim which the

least people have achieved.

Having a good education/

training

Being in a long-term relationship

Financial security for the future/

old age

Individuality and the ability to

make my own decisions

Having my own children

Enjoying life right now

Living healthily

Career development

Having enough opportunity for leisure

activity and personal hobbies

Owning my own home

Discovering the world – travel abroad

Civic engagement

88%

72%

80%

84%

78%

40%

75%

65%

75%

80%

73%

56%

70%

50%

65%

51%

62%

55%

60%

73%

38%

46%

30%

72%

Well achieved

28%

16%

60%

35%

20%

44%

50%

49%

45%

27%

54%

28%

Poorly achieved

Top box (6+7)

Question 3: Now I’d

like to mention several

possible personal life

aims. Please tell me how

important these are to

you. Basis: n = 1,003.

Question 3a: And to

what extent would you

say you have been able

to achieve this aim so far?

Basis: n = 1,003.

52

Satisfaction with some aspects of life.

People are most satisfied with their family and friends and

least satisfied with the economic and political environment.

72%

45%

45%

28%

22%

37%

37%

44%

6%

18%

18%

28%

15% 41% 44%

26% 71%

Very satisfied Very dissatisfied

Your family, your friends

and acquaintances

Your healthcare

Your time for leisure

and hobbies

Your financial provision

for the future/old age

General economic

conditions

Political environment3%

Question 2: Now I’m

going to list some aspects

of your life. Would you

please tell me how

satisfied you are actually

in each instance?

Basis: excluding

“Not sure” answers.

Top box (6+7)

Middle box (4+5)

Low box (1–3)

53

General economic development in Germany.

Own health/illnesses.

Environmental pollution/climate change.

Change in societal values, social coldness.

Financial provision for family members and children.

Limited mobility.

Loneliness (in old age).

Own financial security.

War/terrorist attacks.

Accommodation/level of rents.

Under 29 years 30 to 49 years Over 50 years

0% 10% 20% 30% 40% 50% 60% 70%

Worries about old age.

With the exception of concerns about financial security,

young people worry less than others about their old age.

Top box (6+7)

Question 28: When you

think about your future,

what causes you to be

most concerned with

respect to old age?

Basis: excluding

“Not sure” answers.

54

Political reforms.

Top box (6+7)

10%

94%

I feel very well informed

about political reforms.

I will have to take on

responsibility for providing

for my own future.*

Question 22: Personal

financial planning is cur-

rently a topic of numerous

political reforms. How

well informed are you

about the effects of

these political reforms

in general ?

Basis: n = 1,000 excluding

“Not sure” answers.

Question 23: And how

much faith do you have

in these political

reforms? Do you believe

that the reforms of the

state social-security

system will leave you

adequately provided for

in the future or do you

think that you will have

to take on responsibility

for your personal provi-

sion?

Basis: n = 819 excluding

“Not sure” answers.

* Group not yet retired.

People feel ill-informed and worry about political reforms.

55

Long-term financial

planning is … 62% 27% 11%

very important not at all important

General conditions for

achieving my aims have

improved over the last

five years …

27% 46% 27%

clearly improved clearly deteriorated

Question 6b: If you now

think about your personal

financial situation, do you

believe that long-term

financial planning is

important for achieving

your life aims?

Basis: n = 1,000 excluding

“Not sure” answers.

Question 6a: Altogether:

Have the general condi-

tions for achieving your

aims improved or deteri-

orated for you over the

last five years or has

nothing changed?

Basis: n = 995 excluding

“Not sure” answers.

Long-term financial planning

and general conditions.

Long-term financial planning is important, but the conditions

for achieving this are not improving.

Top box (6+7)

Middle box (4+5)

Low box (1–3)

56

Life aim of financial security

for the future.

Under-30s are optimistic about achieving their goal of being

financially secure in the future.

Group: Convinced they will achieve

their aim.

Group: Not convinced they will achieve

their aim.

53%

41%

72%

44%

49%

18%

49%

32%

79%

52%

43%

6%

7% 5%

Socio-demographic aspects

Up to 29 years

30 to 49 years

50 years and over

Capital investment assets

less than 10,000 EUR

Low income

Average income

High income

%

% 5%

57

Informed

I have already had someone calculate my state pension.

I know exactly how much money I will have available

when I reach retirement age.

Not taking precautions

I have not yet made sufficient provision for old age, but I

know I should do something about that.

Right now, I can only just survive on my income, so I have no

way of contributing to a personal provision plan.

I’m not concerned about my situation when I reach retirement

age because financially, I’m very well provided for.

Taking precautions

I regularly put a little money away for emergencies.

I have supplementary nursing insurance/supplementary

health insurance in case of unexpected illness.

I have arranged long-term personal provision with a

financial expert (from banking, insurance).

Every month I invest at least 10% of my net income in

my personal provision.

Every month I save a certain amount for purchases

and travel.

48%

39%

39%

37%

32%

50%

31%

27%

25%

20%

Long-term financial planning.

Only a small proportion of the population has actually made

long-term financial plans.

Question 7: Now I would

like to read you a few

statements about long-

term financial planning.

Can you tell me which of

these are true for you?

n = 1,003.

Top box (6+7)

58

Long-term financial planning.

A large percentage of the German population has not made any

personal provision for the future.

Top box (6+7)

Middle box (4+5)

Low box (1–3)

An index for actual long-term financial planning

was developed on the basis of 4 important

variables.*

Statements.

• Every month I invest at least 10 % of my net income in my personal

provision.

• I know exactly how much money I will have available when I reach

retirement age.

• I have arranged long-term personal provision with a financial services

expert (bank, insurance).

• I have supplementary nursing insurance/supplementary health insurance

in case of unexpected illness.

* The maximum possible score is 100 %. The variables have been weighted according to their

importance (x3, x2, x1).

Top score: 23%

Good long-term provision

(67 to 100%)

Middle score: 27%

Some long-term provision

(34 to 66%)

Low score: 50%

No long-term provision

(0 to 33%)

59

Top box (6+7)

Satisfaction depending on level

of provision made.

There is an obvious link between financial planning and

satisfaction with life.

Overall satisfaction with life. Satisfaction with financial security for the

future/old age.

59%

51%

50%

45%

25%

21%

Good provision

Some provision

No provision

60

Satisfaction with life.

Only when people are younger does insufficient

personal provision not have a negative effect on their

satisfaction with life.

Up to 29 years 30 to 49 years 50 years and older

80%

60%

40%

20%

0%

Good provision

Bad provision

Top box (6+7)

61

Satisfaction with current long-term

financial plans.

The respondents who are dissatisfied with their long-term

financial plans are those who are younger and/or have lower

incomes.

Group: (very) satisfied with long-term

financial plans.

Group: (very) dissatisfied with long-term

financial plans.

30%

57%

46%

43%

16%

76%

39%

28%

42%

30%

52%

11%

64% 44%

19% 5%

Socio-demographic aspects

Capital investment assets

less than 10.000 EUR

Employed

Up to 29 years

30 to 49 years

50 years and older

Low income

Average income

High income

%

5%

62

Satisfaction with current long-term

financial plans.

The respondents who are satisfied with their long-term

financial plans have done significantly more to provide for

their futures.

Group: (very) satisfied with long-term

financial plans.

Group: (very) dissatisfied with long-term

financial plans.

57%

51%

14%

20%

15%

42%

55%

23%43%

Behavoir

Every month I invest

at least 10% of my

net income in my

personal provision.

I have supplementary nursing

insurance/supplementary

health insurance in case of

unexpected illness.

I have arranged long-term

personal provision with

a financial expert (from

banking, insurance).

I know exactly how much

money I will have available

when I reach retirement age.

Top box (6+7)

63

0,1 0,2 0,3 0,4

60%

40%

20%

0%

Actual satisfaction

Voic

ed s

atis

fact

ion

Friends/colleagues

Partner/spouse

Independent financial advisors/brokers

My personal bank advisor

Family

My insurance company

My bank

Consumer bureaus

My personal

insurance advisorMy own research

Satisfaction with advice and influence on

long-term financial planning.

People value advice from those close to them, yet when it

comes to satisfaction with long-term financial plans, those who

value advice from financial services experts are actually more

satisfied.

Correlation of voiced satisfaction with

actual satisfaction.

All data in % – correlation.

64

Willingness to give up some consumer

expenditure to provide for the future.

82% already forgo or would be prepared to forgo some

consumer expenditure to invest in personal provision

for old age.

18% do not forgo expenditure and would

not be prepared to forgo any.

38% forgo some expenditure and would

be prepared to forgo more.

18% do not forgo any expenditure but

would be prepared to forgo some.

26% forgo some expenditure but would

not be prepared to forgo more.

Question 26: Have you

already given up some

things in order to make

personal provision for

your future/your old age?

Question 24: In principle,

would you be prepared

to forgo some current

consumption to provide

for the future (i.e. your

expenditure on living

expenses, leisure time,

hobbies and vacations)?

* Group: Not yet retired.

65

Income at particular stages of life.

Single parents and older persons who are single have

lower incomes and thus little financial latitude for personal

provision.

9% 48% 45% 62%

48% 48% 36%

4% 7% 2%

65% 56% 45%

77%

14%

40%

Low income

up to 1,500 EUR

Average income

1,501–4,000 EUR

High income

over 4,001 EUR

Capital investment assets

less than 10,000 EUR

Young families (18–40)

with at least 2 children

Single parent with

child (24–40)

Single, 35–49 Single, 50–65

9%

4% 7% 2%14%

67

Imprint.

Life Aims II, 2005 – People in Germany, France,

Italy and Spain

November 2005

Publisher:

Allianz AG

Königinstrasse 28

80802 Munich, Germany

Market research institute:

GfK Marktforschung GmbH, Nuremberg, Germany

Project managers: Karsten John,

Division Manager, Financial Market Research

Birgit Ströhlein,

Research Consultant, Financial Market Research

Allianz AG project team:

Nicolai Tewes, nicolai.tewes@allianz.com

Constanze Mayer

Allianz AG, Group Communications,

Munich, Germany

Dr. Martin Marganus

Folker Michaelsen

Allianz AG, Methods & Controlling,

Munich, Germany

Bérangère Auguste-Dormeuil,

berangere.auguste-dormeuil@agf.fr

AGF, Head of Communications, Paris, France

Martin Bendrich, martin.bendrich@allianz.de

Allianz Versicherungs-AG,

Corporate Communications, Munich, Germany

Karl-Friedrich Brenner,

karl-friedrich.brenner@dresdner-bank.com

Dresdner Bank AG,

Media Relations, Frankfurt /Main, Germany

Ulrich Hartmann, ulrich.hartmann@allianz.de

Allianz Private Krankenversicherungs-AG,

Corporate Communications, Munich, Germany

Günter Kast, guenter.kast@allianzgi.com

Allianz Global Investors AG, Munich, Germany

Jean-Louis Liedana Malga,

jeanlouis.liedana@allianz.es

Allianz, Compania de Seguros y Reaseguros, S. A.

Subdireccion General, Barcelona, Spain

Marc Savani, marc.savani@dit.de

Deutscher Investment-Trust Gesellschaft für

Wertpapieranlagen mbH (dit),

Corporate Communications,

Frankfurt /Main, Germany

Dr. Markus Schwarzer,

markus.schwarzer@allianz.de

Allianz Lebensversicherungs-AG,

Corporate Communications, Stuttgart, Germany

Christian Teichmann,

christian.teichmann@mondial.de

Mondial Assistance

Corporate Communications, Munich, Germany

Valerio Vagone, valerio.vagone@rasnet.it

RAS – Riunione Adriatica di Sicurtà,

Comunicazione e Immagine, Milan, Italy

Macro-economic data:

Dr. Michael Heise

Dr. Renate Finke

Dr. Michaela Grimm

Dr. Mathias Moersch

Dr. Jürgen Stanowsky

Allianz AG, Group Economic Research

Frankfurt /Main and Munich, Germany

Design:

SchumacherGebler KG, Munich, Germany

Print:

Walter Biering GmbH, Munich, Germany

Disclaimer/Copyright

This study, including its results, findings and

contributions, is protected by copyright.

Reproduction, dissemination and publishing of

the study, including abstracts thereof, is subject

to written approval from Allianz AG. All other

rights are reserved.

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