For the seventh year in a row, BETTER FINANCE embarked on the herculean task of gathering all the data on private pensions in 17 EU Member States and published its annual report on the real net returns of long-term and retirement savings in Europe. Despite the fact that the European Supervisory Authorities (ESAs) have a legal duty to collect, analyse and report data on “consumer trends” in their respective fields, the “Pension Savings – The Real Return” Report remains the sole[1] and unique study looking at the performance and costs of long-term and savings products in the European Union.

If it were not for this report by BETTER FINANCE, EU citizens and public supervisors would remain completely in the dark with regards to the real net performance and costs of those products that form the backbone of the European pension system.

Whereas the report is even wider in scope this year, covering 17 pension systems and 87% of the EU population, the results unfortunately continue to point to the same worrying conclusion:

For years now, public authorities have insisted on the fact that that citizens need to take their responsibility and start saving more and for longer to achieve income adequacy at retirement. So far, our research indicates this advice may be misplaced: in far too many instances, saving more would only make you lose more. Crucially, it 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.

Whereas asset allocation and unsuitable investment styles may share a part of the blame, fees and commissions are the main reason behind low returns on pension products, destroying the real (after inflation) value of pension savings over the long-term. Inflation, though conveniently ignored, also plays an important role in destroying the value of your savings.

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