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Home / Money / Personal-finance /  Indians becoming more aware of need to plan for retirement: report

The concept of retirement is evolving: life expectancy continues to increase; pressure on governments and pension systems is intensifying; and greater responsibility is shifting to the individual.

The fifth annual Aegon Retirement Readiness Survey, conducted across 15 countries, including India (900 working and 100 retired respondents), explored how increasing life expectancy is impacting the ways in which individuals plan for retirement. While India achieved the highest Aegon Retirement Readiness Index (ARRI) score among all the countries surveyed, there is still work to be done to make sure that Indians are ready for retirement. Here are some of the key findings from the survey.

India leads: With a score of 7.3 out of 10, India has a medium level of retirement readiness. It is the only country out of the 15 to have achieved a score of over 7.0 (see table).

Improvement in attitude: The proportion of Indians who feel personally responsible for ensuring that they will have sufficient income in retirement has risen from 79% in 2014 to 83% in 2016. Apart from that, those with well-developed retirement plans has increased from 64% in 2014 to 67% in 2016. Over the same period, the proportion that said they are prepared for retirement has increased from 60% to 64%.

Increase in people with written retirement strategies: The proportion of Indian workers with a written retirement strategy has increased from 79% in 2014 to 84% in 2016. This was driven by an increase among those with a written plan (from 18% to 29% during that time period), while the number with an unwritten plan has actually fallen (from 61% to 55% since 2014). Women are more likely to have a written plan than men.

Over 60% have back-up plans: Over three-in-five Indians have back-up plans in the event they are unable to work and have to leave the workforce earlier than planned. Of the 15 countries surveyed, Indians are the most likely to have a back-up plan (63% compared to 32% globally). But they are also the most likely to say that their savings form part of their back-up plan (71% compared to 58% globally).

Responsibility for funding retirement should be shared: Over 80% of Indians agree that the government should encourage employers to automatically enrol their employees into a retirement plan, which employers should provide through retirement plan benefits, and individuals should save for themselves through private pensions and other investments.

Funding retirement through own savings and investments: Indian workers and retirees expect to fund over two-fifths of their income in retirement through their own savings and investments. Among the 15 countries surveyed, Indians expect the lowest proportion of their retirement income to come from government funding (25% compared to 46% globally).

Benefits offered to attract and retain older workers: As many as 45% of Indians workers who took part in the survey say their employer offers phased retirement or programmes providing for a transition into retirement (global average is 28%). More than half (56%) say their employer offers them the ability to work past the normal retirement age.

Edited excerpts from Aegon Retirement Readiness Survey.

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