France ranks 20th in 2016 Natixis Global Asset Management Retirement Index
• French health system and high life expectancy drive ranking
• Low economic growth and tax pressure pose challenges
• Global policy trends that contribute to retirement security are highlighted
France ranks 20th for retirement security, according to the 2016 Global Retirement Index, released today by Natixis Global Asset Management. The index examines key factors that drive retirement security and provides a comparison tool for best practices in retirement policy across 43 countries around the world.
“Retirement used to be simple: Individuals worked and saved, employers provided a pension, and taxes funded government benefits, resulting in a predictable income stream for a financially secure retirement,” said John Hailer, Chief Executive Officer of Natixis Global Asset Management in the Americas and Asia and Head of Global Distribution. “But demographics and economics are undermining the old model. The countries in our index are trying to find innovative ways to adapt to the new reality and provide a blueprint for the rest of the world.”
Northern Europe dominates the top 10 countries of 2016, including Norway at No. 1, followed by Switzerland, Iceland, Sweden, Germany, The Netherlands, and Austria. They are joined by New Zealand (No. 4), Australia (No. 6) and Canada (No. 10).
The Natixis Global Asset Management Retirement Index, introduced in 2013, creates an overall retirement security score based on four factors that affect the lives of retirees. Finances in retirement are weighted most heavily, but the index includes considerations for material wellbeing, health, and quality of life to provide a more holistic view. With this year’s edition, Natixis has focused on a smaller number of countries than in the past, mainly developed economies where retirement is a pressing social and economic issue.
France ranks high for health and life expectancy, but financial factors pose a challenge
France ranked 20th this a year, a slight shift from 18th position last year, however the change is due primarily to a change in methodology in this year’s Index that now more heavily weights financial indicators in the overall score.
The country ranks highly in Health and moderately highly in Quality of Life and Material Wellbeing. France’s social security system is very favourable toward retirees although it does put pressure on public spending. It also has a strong healthcare system as indicated by high scores in the Health sub-index (4th) with high insurance coverage for health expenditure. France also has a very high life expectancy and provides a high quality of life.
These indicators are balanced by a lower Finances in Retirement score based on lower scores for tax pressure. France, however, did improve its comparative score in this indicator within the Finances in Retirement sub-index. The country also saw improvements in unemployment.
France’s productivity is among the best in the world ahead of major Eurozone economies like Germany, and labour market reforms could boost employers’ focus on creating jobs. The country’s working age population is projected to become the largest among Eurozone peers by 2050, surpassing Germany.
"The main challenge now facing France is managing finances without compromising the public services which benefit retirees” said Christophe Point, Managing Director of Natixis Global Asset Management Distribution for France, French-speaking Switzerland and Monaco. “The progressive policies carried out by many successful countries in our index are important to ensuring long-term retirement security. These countries assign particular importance to retiree’s well-being and have implemented policies, tax incentives and engagement programs to encourage future retirees to become better prepared. We know that already in France 70% of individual French investors1 say they are aware that individuals will have to fund an increasing share of their own retirement.”
Four global trends
Many of the successful countries in our index share four major trends. Policy makers and employers can draw interesting conclusions:
- Access: An aging workforce and increased lifespans in many Western countries have made traditional pay-as-you-go models for government retirement benefits less effective. As individuals assume greater responsibility for their retirement funding, policy makers in leading countries ensure that workers have better access to adapted retirement plans.
- Incentives: Proactive policies expand short-term incentives that encourage individuals to save more for retirement. Favourable tax treatment for retirement savings helps workers put away more money to supplement their income in retirement.
- Engagement: Participation in supplementary employer pension plans is a step in the right direction. Wise policy also ensures that workers have the right investments and enough information to help them maximize the benefits of plan participation.
- Economics: Retirement security extends beyond the savings vehicles themselves. It includes consideration for healthcare, monetary and fiscal policies, which all play a role in helping retirees to be self-sufficient.
“Individuals may have to assume greater responsibility for their retirement funding; nevertheless this should also be the responsibility of policy makers, employers and the investment industry – altogether – to ensure workers have the tools and incentives they need to save and better plan for their retirement”, explains Christophe Point. “Achieving retirement security is a daunting goal, but it is within reach if each stakeholder does their part.”
To see the 2016 Natixis Global Retirement Index and download the full report, go to http://durableportfolios.com/Global-Retirement-Index-2016
The Global Retirement Index was compiled by Natixis Global Asset Management with support from CoreData Research, a U.K.-based financial research firm. The index includes IMF advanced economies, OECD and BRIC countries. The report captured data from a variety of sources, including the World Bank. The researchers calculated a mean score in each category and combined the category scores for a final overall ranking of the 43 nations studied.
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Headquartered in Paris and Boston, Natixis Global Asset Management, S.A.’s assets under management totaled $884.9 billion (€776.4 billion) as of March 31, 2016.2 Natixis Global Asset Management, S.A. is part of Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest banking group in France. Natixis Global Asset Management, S.A.’s affiliated investment management firms and distribution and service groups include Active Investment Advisors;3 AEW Capital Management; AEW Europe; AlphaSimplex Group; Axeltis; Darius Capital Partners; DNCA Investments;4 Dorval Finance;5 Emerise;6 Gateway Investment Advisers; H2O Asset Management;5 Harris Associates; IDFC Asset Management Company;
Loomis, Sayles & Company; Managed Portfolio Advisors;3 McDonnell Investment Management; Mirova;5 Natixis Asset Management; Ossiam; Seeyond;7 Vaughan Nelson Investment Management; Vega Investment Managers; and Natixis Global Asset Management Private Equity, which includes Seventure Partners, Naxicap Partners, Alliance Entreprendre, Euro Private Equity, Caspian Private Equity and Eagle Asia Partners. Visit ngam.natixis.com for more information.
Natixis Global Asset Management also includes business development units located across the globe, including NGAM S.A., a Luxembourg management company authorized and regulated by the CSSF, as well as branch offices of NGAM Distribution in France.
1Cerulli Quantitative Update: Global Markets 2016 ranked Natixis Global Asset Management, S.A. as the 16th largest asset manager in the world based on assets under management ($870.3 billion) as of December 31, 2015.
2 Net asset value as of March 31, 2016. Assets under management (AUM) may include assets for which non-regulatory AUM services are provided. Non-regulatory AUM includes assets which do not fall within the SEC’s definition of ‘regulatory AUM’ in Form ADV, Part 1.
3 A division of NGAM Advisors, L.P.
4 A brand of DNCA Finance.
5 A subsidiary of Natixis Asset Management.
6 A brand of Natixis Asset Management and Natixis Asset Management Asia Limited, based in Singapore and Paris.
7 A brand of Natixis Asset Management.