Retirement Solutions for the European Wealthy

[Amy Cole]

I enclose details of our latest report on Retirement Solutions for the European Wealthy.
   
This report examines the savings and investment solutions used by High Net Worth Individuals in Europe to accumulate funds for retirement. It focuses on the wealth markets in the UK, Germany, France, Italy and Spain and assesses the contribution of occupational and private pensions, as well as alternative products, to the retirement portfolio.   
   
Scope of this title:   
- The report sizes the wealth markets in five major European economies and profiles key investor segments in each country.   
- It examines second and third pillar pension solutions for high net worth individuals, and reviews current regulatory reforms and market developments.   
- It identifies the main alternative retirement solutions being recommended, based on primary research among wealth managers and financial advisors.   
   
Highlights of this title:   
- The degree of reliance on occupational or second pillar pensions to provide retirement income for high net worth individuals varies across countries. The relative adequacy of company pension plans depends, in large measure, on contribution limits, which have a direct impact on future retirement benefits.   
- Despite considerable development in the legislative framework for pensions in Europe over the last two decades, there is scope for the development of a market for alternative non-pension retirement solutions. With the exception of the UK, and to a lesser extent, France, private schemes provide few additional advantages over occupational pensions.   
- High net worth individuals rely on a wide range of alternative retirement savings vehicles, including SRIs, REITs, mutual funds, property and equity investments.   
   
Reasons to order your copy:   
- Understand the size and scope of the wealth markets in key European states and the increasing demand for supplementary retirement provision.   
- Analyze developments in the markets for occupational pension products for high income earners, and for private pension solutions.   
- Identify the alternative savings solutions required by high net worth clients to meet their retirement goals.   

For a complete index of this report click on:   
http://www.researchandmarkets.com/product/f011d1/retirement_solutions_for_the_european_wealthy   
   
Report Index:   
   
Executive Summary 4   
Market context 4   
The European Wealth Market 4   
Occupational Pensions 4   
Private Pensions 6   
Market Development 7   
Alternative Retirement Saving Solutions 8   
Introduction 19   
What is this report about? 19   
Who is the target reader? 19   
How to use this report 19   
   
Chapter 1.    
   
Market context 21   
Europe sees increasing demand for supplementary retirement provision 21   
High net worth clients require specialized products and advice 22   
   
Chapter 2.    
   
The european wealth market 23   
Introduction 23   
Key findings 23   
The High Net Worth market in Europe continues to grow 23   
The structure of the market influences the choice of retirement solutions 25   
   
Chapter 3.    
   
Occupational pensions 27   
Introduction 27   
Key findings 27   
Occupational Pensions offer a partial solution to the challenge of building an adequate retirement fund 27   
The UK has, by far, the most highly developed market for occupational pensions 28   
Specialist occupational pensions have been established for high income earners 29   
A-day reforms have eliminated the necessity to purchase an annuity at retirement 30   
EPPs and Group AVCs dominate the market for occupational pensions for high income earners 30   
HNW individuals are restricted by basic company schemes in Germany 32   
Five options for occupational pension plans exist in Germany 32   
German occupational pension schemes allow limited scope for choice 33   
Article 39 contracts, Article 83 contracts and PERCO schemes are available for French executives 34   
Article 39 and Article 83 contracts represent the traditional retirement plans for French executives 34   
The 2003 reforms provided new alternatives 35   
Article 39 contracts continue to be the preferred alternative 36   
There is limited usage of occupational pensions in Italy 37   
Company schemes take the form of closed and open pension funds 37   
Spanish occupational pension plans are largely unsuitable for high income earners 39   
Occupational pension options in Spain include company and associate schemes 39   
Limits on contributions to Spanish pensions are restrictive 40   
   
Chapter 4.    
   
Private pensions 42   
Introduction 42   
Key findings 42   
Private Pension Plans - Closer To High Net Worth Retirement Targets 42   
Greater flexibility is required for the development of the private pensions market 43   
Private pension options for wealthy UK clients include SIPPs, Section 32 Transfers and FSAVCs. 44   
Self Invested Personal Pensions continue to be the most popular product for HNW individuals in the UK 44   
The nature and intensity of competition in the UK HNW retirement market are changing 46   
A-day reforms encourage new market entrants and new products 46   
New regulations will be introduced to protect SIPP investors 47   
Riester pensions supplement state and occupational provisions in Germany 47   
The German government incentivises the use of Riester contracts 47   
The uptake of Riester pensions has been gradual 48   
PERP plans are set to become increasingly popular in France 49   
Madelin contracts are the traditional private pensions vehicle 49   
Legislative reform in 2003 introduced the PERP 50   
PERP plans are expected to become increasingly popular over the next few years 51   
Italy's private pensions market is limited in size and scope 52   
Open pension funds and piani individuali pensionistici (PIPs) provide private pensions in Italy 52   
PIPs are the preferred option for private pensions 53   
There is scope for development of the Italian private pensions market 55   
Private pensions in Spain are a mix of insurance products and pension funds 55   
Private pensions in Spain are available as individual pension plans or individual life insurance policies 55   
Private pensions are widely used, but contributions remain low 56   
   
Chapter 5.    
   
Market development 58   
Key findings 58   
The UK Government is keen to encourage the use of annuities 58   
The Treasury objects to the use of ASPs to avoid inheritance tax 58   
ASPs will become a less attractive option 59   
A call for increasing flexibility, efficiency and transparency in Germany 60   
Germany's BVI sees a need for more flexible occupational pensions 60   
Wealthy Germans require more sophisticated pension alternatives 60   
Enactment of the EU Occupational Pensions Directive will create new market opportunities in France and across Europe 61   
EU legislation opens up the market for occupational pensions 61   
Providers will see new product and market development opportunities, pending enactment across Europe   
but legal and regulatory complexity will persist 61   
Expansion of the occupational and private pensions markets is anticipated in Italy 62   
Upcoming legislative changes will create opportunities for more funds to be allocated to pension schemes and for innovative products to be developed in Italy 62   
Innovative product development is anticipated 62   
The revised tax regime in Spain will further reduce the appeal of pension plans to the wealthy 63   
Lower overall contribution limits will restrict investment by HNW individuals 63   
The Spanish government favors annuitization 63   
A new long-term savings plan will compete with life insurance and pension funds 64   
   
Chapter 6.    
   
Alternative retirement savings solutions  65   
Introduction 65   
Key findings 65   
UK High Net Worth Investors add SRIs, Venture Capital Trusts, property and hedge funds to their portfolios 65   
Tax treatment of funds in excess of the Lifetime Allowance heightens the need for alternative investments 65   
SRI funds and REITs provide additional long term investment options 66   
The UK High Net Worth segment favours investment in hedge funds to reduce volatility   
VCTs are used for tax optimization 67   
There is tempered demand for insurance-based products in Germany 67   
German wealth managers recommend managed solutions, including investment in mutual funds and equity 67   
Risk aversion in Germany will sustain demand for with-profits funds and  guaranteed products 69   
Legislation creates a more complex operating environment, but ultimately benefits investors 70   
There will be consolidation in the market and providers will need to reconsider their operating strategies 71   
Life insurance, property and equity investments supplement pension provisions in France 72   
Life insurance is a popular option for retirement savings 72   
Commercial real estate offers a viable option for retirement planning 73   
PEAs provide a platform for investment in equity 73   
Italian High Net Worth clients rely on a wide range of instruments 73   
Italian aversion to risk limits investors' use of equity investments 74   
Property and Variable Annuities may offer more predictable alternatives 74   
Wealthy Spaniards select among mutual funds, equity investment, Sicavs and property 74   
Despite a traditional aversion to its inherent risks, wealthy Spaniards are willing to invest in the stock market 75   
Sicavs are appropriate for some HNW investors 75   
Demand for property investment remains strong 75   
Spanish HNW individuals pursue  innovative solutions 76   
Amendments to the tax code will have implications for long term investments 76   
APPENDIX  77   
Definitions 77   
Further reading 79   
SPP writing team    
   
List of Tables   
Table 1: Gross Replacement Rates of 1st Pillar Pensions 20   
Table 2: High Net Worth Individuals 2005 24   
Table 3: UK Occupational Pension Plans - Total New Business H1 2006 30   
Table 4:  France: Occupational Pension Plans - Annual Contributions 2005 36   
Table 5: Italy: Occupational Pension Plans H1 2005 & 2006 38   
Table 6: Spain: Occupational Pension Contributions Jan - Sep 2006 40   
Table 7: UK: Private Pension Plans - Total New Business H1 2006 44   
Table 8: New Riester Contracts 2000-2005 48   
Table 9: France: Personal Pension Plans Annual Contributions 2005 51   
Table 10: Italy: Personal Pension Plans - Contributions Q1 2006 53   
Table 11:  Spain: Personal Pension Plans & Retirement Insurance  Contracts Jan - Sep 2006    
   
List of Figures   
Figure 1: High Net Worth Individuals 2005 23   
Figure 2: High Net Worth Individuals 2005 - Total Net Worth 23   
Figure 3: UK: Occupational Pension Plans - Total New Business H1 2006 30   
Figure 4: France: Occupational Pension Plans - Annual Contributions 2005 35   
Figure 5: Italy: Occupational Pension Plans HI 2005 & 2006 37   
Figure 6: Spain: Occupational Pension Contributions Jan - Sep 2006 39   
Figure 7: UK: Private Pension Plans - Total New Business H1 2006 44   
Figure 8: Germany: New Riester Contracts 2000-2005 47   
Figure 9: France: Personal Pension Plans Annual Contributions 2005 50   
Figure 10: Italy: Personal Pension Plans - Contributions Q1 2006 53   
Figure 11: Spain: Personal Pension Plans & Retirement Insurance  Contracts Jan - Sep 2006 56   

Pricing:   
   
Electronic : EUR 4810   
   
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1] Order online at http://www.researchandmarkets.com/product/f011d1/retirement_solutions_for_the_european_wealthy   
   
2] Order by fax: Print an Order form from http://www.researchandmarkets.com/product/f011d1/retirement_solutions_for_the_european_wealthy and Fax to +353 1 4100 980   
   
3] Order by mail: Print an Order form from http://www.researchandmarkets.com/product/f011d1/retirement_solutions_for_the_european_wealthy and post to Research and Markets Ltd. Guinness Center, Taylors Lane, Dublin 8. Ireland.   
   
Thank you for your consideration.   
Best Regards,   
   
Amy Cole
   
Senior Manager
   
Research and Markets Ltd
   
amy.cole na researchandmarkets.com   
   
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