Pensions may not equal salaries

 In News, Pensions

A university professor’s study has revealed that under half of the Portuguese (43%) are saving for their retirement.

And in the study by Professor Fernando Alexandre, a significant part of the Portuguese believe that their pensions will cover their former salaries by 100% on retirement.
Reacting to the findings, the former president of Portugal’s Treasury and Public Debt Agency (IGCP) and current executive board member at the bank BPI, Cristina Casalinho said she was “surprised” on Thursday at the Portuguese Insurance and Pension Funds Supervisory Authority’s annual conference at which the study was presented.
“I am rather surprised at the significant number of respondents who believe that their salary replacement rate on their pensions will be 100% given the heated discussion on pensions sustainability”, she said.
Cristina Casalinho says that people’s perceptions are “unrealistic” and call for a “reflection as to the reality” to understand if this is related to “communication problems or financial literacy”, because “if people still have this expectation, they need to be duly informed” that this is not the case.
“To 2030, 65% of a person’s salary (on retirement) is relatively acceptable; from there on, no. In 2060, if research is correct, pensioners will get just 40% of their salary.
The expectation of a loss of income in future is the main reason for the uptick in savings for retirement (54%), followed by higher costs on healthcare and the intention to travel.
The main application of retirement savings are in shares (26%), followed by savings deposits (18%) and pension reform plans (13%).