Employees are less sanguine about their retirement than they were a year ago — particularly in the United States — despite the past year's improved worldwide economic condition, according to a new Principal International report.
A survey of more than 5,000 people in 12 countries by the unit of Des Moines, Iowa-based Principal Financial Group found that most people expect a lower standard of living in retirement, and few expect much help from either their government or their employer.
"The capital markets and 401(k) plans are no longer showing red numbers and we thought people would feel more confident" about their retirement, said Norman R. Sorensen, president of Principal International. "Across the board, in the great majority of countries, that confidence has worsened."
He said the biggest surprise was that 49% of U.S. employees are concerned their standard of living in retirement will be worse than it is now. "Last year, that number was 29%," Mr. Sorensen said. "Twenty-nine percent is a worrisome number. Forty-nine is a shocker."
The number of people who think their government will help them maintain their standard of living in retirement is low except in India and China, where Mr. Sorensen said employees are simply not informed enough to understand that their governments will not be able to sustain them in retirement.
On the corporate side, Mr. Sorensen said a lack of employer advice about retirement and investment planning was the reason for low employee confidence about retirement support.
"Employers who can provide advice decline (to do so) because of perceived financial liability," Mr. Sorensen said. He added that in some countries like the United States, pension plan providers like Principal Group are not allowed to provide advice.
He said the remedy is to give employees that advice so they can become more confident in their ability to plan their retirement.