97% of Italians believe that it is necessary to supplement the state pension, and 65% are convinced that only the state pension will not be enough to live with dignity after retirement. In addition, there is also the fear for increasingly youth-based groups, that the expected retirement age continues to increase beyond 70.
That’s what a commissioned study found Trade Republica German online broker based in Berlin, to Michele Raitano (Director of the Department of Economics and Law) and Marco Di Pietro (Associate Professor of Economic Policy) at the University of La Sapienza, which derives from several positive implications that 18% of Italians believe that more it is good to supplement their public pension by making private investments in financial instruments.
The propensity to invest has become more widespread among young people
Going into detail, the research also highlights how there is a greater propensity to invest, and in particular to invest in ETFs, especially among the younger generations; investing in ETFs (44%) and most likely to choose an ETF over a pension fund (18%).
And speaking of ETFs, the analysis highlights how cumulative plans in global equity ETFs historically there have been a a powerful complement to pension funds for long-term investmentProviding annual returns 1.8 percentage points higher than the average pension fund over 20 years.
“In detail, looking at historical performance, global equity ETFs, we read in the research, have outperformed the average pension fund, with a 6% annual return compared to 4.2% for the average pension fund (ie 43%). : more each year), net of management costs. The absolute highest returns are achieved by individuals who invest additional cash from pension fund tax deductions into global equity ETF accumulation plans, effectively combining the two forms of investment. The pensions gap affects us all, with public pension costs currently at 16% of GDP and set to rise even further.”
Risk groups
The study also highlights those strata of society that are most at risk of financial hardship after retirement. In other words, 68% of those without a job and 50% of those with an income of less than 1000 euros per month do not have any investment or additional pension.
“Increasing the retirement age has displaced private pension provision”. comments study co-author Michel Raitano, who adds: “At the current retirement age, those with a stable career will receive an equivalent state pension. For them, the motivation to invest in supplementary pensions depends on the contribution of the employer and, above all, on the significant tax advantages, which are mostly regressive. Those who would need integration instead—the vulnerable workers and the working poor—don’t have the resources to do so and therefore don’t participate in additional social security and tax benefits.”