Date: 17th October 2017

The Organisation for Economic Co-operation and Development (OECD) recently repeated the Public Authorities’ mantra that citizens need to take their responsibility with regard to their pension savings, stating that “in light of the challenges facing pension systems, the only long-term solution for achieving higher retirement income is to contribute more and for longer periods”. Whereas this may be sound advice, it repeatedly ignores a key reason as to why too many long-term and pension savings are failing to provide for an adequate replacement income: insufficient and sometimes even negative long-term real (after inflation) returns. In fact, saving “more and for longer periods” will not even remotely address the issue by itself, since even saving 10% of activity income for 30 years - as often recommended - with a zero real net return will only provide about 12 % of one’s activity income through retirement.