The Aegon Retirement Readiness Survey 2018 | 1

The New Social Contract: a blueprint for retirement in the 21st century

The Aegon Retirement Readiness Survey 2018

Brazil Country Report

2 | The Aegon Retirement Readiness Survey 2018

ContentsIntroduction 3

Key Findings 4

The 2018 Survey

Part 1: Megatrends and evidence of a crumbling social contract 5

Part 2: Improving individual retirement security – the role of financial literacy and auto-enrollment 10

Part 3: Potential health issues loom large as retirement concerns 14

Part 4: Living and aging in good health and with dignity 17

Part 5: Forging the new social contract 19

Appendix 20

Note: Percentages are shown to zero decimal places. Rounding percentages to the nearest

whole number may result in slight differences; for example, the percentages in some charts

summing to slightly under or slightly over 100 percent.

The Aegon Retirement Readiness Survey 2018 | 3

IntroductionThe Aegon Center for Longevity and Retirement is pleased to

present findings from its seventh annual Aegon Retirement

Readiness Survey, The New Social Contract: a blueprint for

retirement in the 21st century. This survey is the result of

collaboration with nonprofits Transamerica Center for Retirement

Studies (based in the U.S.) and Instituto de Longevidade Mongeral

Aegon (based in Brazil). This report, while specific to Brazil, is

based on research conducted in 15 countries spanning Europe, the

Americas, Asia and Australia.

Changes taking place in Brazil and around the world are giving rise

to new pressures on existing social contracts forged during the last

century. This is forcing all of us to look differently at our plans for

achieving good health and financial prosperity in later life.

The idea of a “social contract” has been central to the way in which

people in Brazil plan and prepare for retirement. This contract

was established between governments, employers and individual

workers, setting forth their respective responsibilities. For many

decades, Brazil has operated an enduring system of benefits and

entitlements that has helped millions of people in Brazil to achieve

a secure and fulfilling retirement.

The first official initiative regarding pension plans in the country

occurred in 1835, with the creation of the mutual company

Montepio Geral dos Servidores do Estado, that went on to become

Mongeral Aegon Seguros e Previdência. By the time Brazil’s

pension system was unified in the 1960s, life expectancy was just

over 54 years for most workers. Life expectancy has improved

dramatically in the intervening years and now stands at 75.5 for

the average person in Brazil1. The Brazilian Social Security System

allows people to become eligible to claim a benefit either based on

years of contribution (35 years for men and 30 years for women,

with no minimum age requirement) or on reaching a certain age

with a minimum of 180 months contribution (65 years old for men

and 60 years old for women). Despite reforms undertaken in recent

decades, the system in Brazil is coming under increasing financial

strain. As the findings throughout this report illustrate, it is time

for a new social contract.

This report focuses on the responses of 1,000 people in Brazil

including 900 workers and 100 retirees. It investigates the

stresses and pressures being put on the Brazilian retirement

system and the roles the government and employers are expected

to perform. The report evaluates the retirement readiness of

workers themselves and investigates improvements that can be

made to help workers achieve the aspirations they hold for their

retirement. It investigates the growing importance of health in

the realities of financial planning, and for the first time the report

examines the issue of aging with dignity. With more people in

Brazil reaching their 80s, 90s, and 100s, issues around healthy

aging and financial security are becoming ever more pertinent.

1 World Bank, Life expectancy at birth, total (years) – Brazil, 2018

4 | The Aegon Retirement Readiness Survey 2018

Key Findings:• The Aegon Retirement Readiness Index (ARRI) measures

how prepared workers around the world feel for their

retirement. With a score of 6.6, up from 6.4 in 2017, Brazil

places third in the 2018 Aegon Retirement Readiness

Index. India (7.3) leads, with China (6.7) moving up to second

in place, and Brazil overtaking the U.S. this year – highlighting

the positivity of the emerging market countries.

• People in Brazil are much more likely to cite reductions in

government benefits as a mega trend impacting on their

retirement plans (54 percent, compared to 38 percent

globally). People in Brazil are also far more likely to cite

changes in labor markets as a megatrend impacting on

their retirement plans (32 percent, compared to 21 percent

globally). Both of these mega trends have been top of the

political agenda in Brazil over the past year, particularly in

terms of divisive reforms.

• More than half (52 percent) of people in Brazil expect

future retirees to be worse off in retirement than current

retirees, slightly more than the average globally. Just 17

percent of people in Brazil think future retirees will be better

off than those currently retired.

• People in Brazil expect 48 percent of their retirement

income to come from the government. Just under a quarter

(23 percent) is expected to come from their employers, while

29 percent is expected to come from their own savings and

investments..

• More than a quarter (26 percent) of people in Brazil think

the government’s best solution for fixing the pension

deficit is to reduce the overall cost of social security by

reducing the value of payments over increasing taxes. The

same proportion (26 percent) of people in Brazil supports

a balanced approach with some reductions in individual

payments and some increases in tax. However, a substantial

14 percent feel the government should do nothing as today’s

system will be affordable – flying directly contrary to the

World Bank and OECD’s predictions of unaffordability within

a decade.

• Nearly two-in-five (39 percent) workers in Brazil are

habitually saving for retirement. Nearly a quarter (24

percent) are saving on an occasional basis, and just four

percent of workers in Brazil are not saving for retirement and

have no intention of doing so. .

• Three-in-ten (30 percent) people in Brazil were able to

correctly answer all of Annamaria Lusardi and Olivia

Mitchell’s “Big Three” Financial Literacy questions2.

People in Brazil performed better on the compound interest

question (79 percent), and the diversification risk question

(47 percent) but under-performed on the inflation question

(61 percent) compared to the global average. Workers in

Brazil who were more financially literate and managed to

correctly answer all 3 of the “Big Three” Financial Literacy

questions achieved higher ARRI scores (6.8, compared to 6.6

overall in Brazil).

• Almost three-in-five (58 percent) people in Brazil find the

idea of auto-enrollment appealing. However, appeal is lower

among Millennials (54 percent) and people in Brazil with a low

income (49 percent).

• Running out of money (52 percent) and declining physical

health (48 percent) are the two retirement concerns that

prey most on the minds of people in Brazil. People in Brazil

have particularly strong concerns about not being able to stay

active (45 percent), losing their independence (44 percent),

and not being able to do the things they enjoy (44 percent).

• A lack of confidence in the affordability of Brazil’s health

system is clearly evident. Just 12 percent of people in

Brazil are confident that their own healthcare will be

affordable in their retirement. This falls further among

women (8 percent), Baby Boomers (9 percent) and those in

fair health (8 percent).

2 Lusardi, Annamaria and Olivia S. Mitchell. ‘The Economic Importance of Financial Literacy: Theory and

Evidence’. Journal of Economic Literature. 2004, 52(1): 5-44

The Aegon Retirement Readiness Survey 2018 | 5

3 World Bank, Summary Note on Pension Reform in Brazil: Why is it needed and What Will be its Impact?. April 20174 PwC, Brazil: New labor law reform may provide opportunities to reduce mobility costs. November 20175 BBC News, “Brazil Senate passes controversial labour reform” BBC News. 12 July 2017

Globalization, innovation, advances in science and technology. Our world is changing rapidly amid these and other trends. Many of these

trends are so impactful that they can be considered megatrends. Changes brought about by megatrends are already shaping societal

constructs, how people lead their daily lives, plan for their future, and, ultimately, prepare for their retirement.

More than half of people in Brazil (54 percent) say that reductions in government retirement benefits are impacting on their plans for

retirement. No other trend, in no other country surveyed is deemed as more important– and understandably so, with proposed pension

reforms becoming ever more problematic for the Brazilian government. The World Bank expects the Brazilian state pension system (one

of the most generous systems in the world) to consume the entire federal budget by 2030.3 Political difficulties in Brazil, including the

first military takeover of security in 30 years in the State of Rio de Janeiro, made addressing pension reform impossible as constitutional

amendments cannot be made during such federal interventions – not to mention protests against the reform ending violently in recent

years.

After reductions in government retirement benefits, changes in labor markets is the second most common megatrend that people

in Brazil think will impact on their retirement plans (32 percent) – again, this is felt more strongly in Brazil than in any other country

surveyed. The past year has seen passage of the 2017 Labor Reform bill, with changes to the decades-old labor law granting firms

more freedom to negotiate contracts with employees, as well as increased flexibility for workers’ overtime and holidays among the new

proposed measures.4 The government claims that these reforms have the aim of boosting Brazil’s low labor productivity whilst freeing up

the job market, yet unions have called for a number of strikes in response to fears of reduced job security.5

Part 1: Megatrends and evidence of a crumbling social contract

Global

Brazil

Increased life expectancy 25%27%

Prolonged low interest rate environment 12%20%

Globalization 12%12%

Climate change 6%12%

None of the above 9%14%

Urbanization 6%8%

Don't know 5%10%

International political instability 22%19%

Reductions in government retirement benefits 38%54%

Volatility in financial markets 22%24%

Changes in labor markets 32%21%

New technologies and digital transformation 12%10%

Changing demographics 6%14%

Terrorism 6%11%

Cybersecurity issues 6%9%

Chart 1 – Reductions in government retirement benefits is the dominant megatrend expected to impact Brazilian retirement plans

6 | The Aegon Retirement Readiness Survey 2018

6 OECD, “Country Profiles – Brazil”, Pensions At A Glance 2017: OECD and G20 Indicators. 2018

Amid concerns about potential reductions in government benefits, increased longevity, and changes in employment trends, the current

social contract is crumbling. Brazil’s retirement system represents a social contract that currently operates on a three-pillar approach

that is commonly referred to as a “three-legged stool.” The three pillars – Social Security (Pillar 1), workplace retirement benefits (Pillar

2) and personal savings (Pillar 3) are provided by the partners of the social contract – the government, some big/mid Brazilian companies

and the workers, respectively. This contract was developed and proliferated throughout the twentieth century to help ensure that

individuals were provided for in their old age.

Brazil operates a pay-as-you go plan through the National Social Security Institute. Brazil has one of, if not the most generous

and expensive pension systems among the world’s developing countries. It provides generous social assistance with low eligibility

requirements.6 People in Brazil recognize this and expect nearly half (48 percent) of their retirement income to come from the

government. This rises to 61 percent among Brazil’s Baby Boomers but falls to 40 percent among Millennials. People in Brazil expect 23

percent of their retirement income to come from their employers, while the remaining 29 percent is expected to come from their own

savings and investments – rising to 34 percent among Millennials compared to just 20 percent among Baby Boomers. Baby Boomers

themselves will be nearing or at retirement age and have that relative certainty of knowing where their funding will come from once they

exit the workplace. Millennials on the other hand have entered the workplace as the uncertainty about the sustainability of the Pillar 1

pension continues to dominate headlines, as well as the introduction of a nascent Pillar 3 in the shape of retirement savings accounts

offered by insurance companies.

On entering retirement, workers in Brazil expect to earn on average 75 percent of their current income (second only to Poland where

residents expect to receive 77 percent). Almost half of workers in Brazil (47 percent) think that they are on course to achieve at least 75

percent their expected retirement income – higher than in any other country surveyed. The question is, given the pressures on the system,

how do people in Brazil expect the government to sustain this level of funding?

The world is changing. Over the past 50 years, global megatrends, such as increasing lifespans, changing demographics, and more

recently, the prolonged low interest rate environment, have impacted the way governments and corporations manage retirement systems

and how social contracts operate. Continued change is inevitable, reshaping the contours of the retirement landscape in Brazil for

decades to come and influencing how future generations save, invest, plan and prepare for retirement. People in Brazil are predominantly

pessimistic about the future of retirement. More than half (52 percent) believe that future generations of retirees will be worse off than

those currently in retirement (exceeding the global average, 49 percent).

Chart 2 – More than half of people in Brazil expect future generations to be worse off in retirement than current retirees

Chart 3 – People in Brazil expect nearly half of their retirement income to come from the government

Global 49% 24% 18% 9%

Brazil 52% 27% 17% 5%

Worse o

About the same

Better o

Don’t know

Global 30%46% 24%

Brazil 29%23%48%

Government

Employer

Own savings & investments

The Aegon Retirement Readiness Survey 2018 | 7

7 UN, “Brazil”, World Population Ageing 1950-2050. 20028 OECD, OECD Policy Memo: Pension Reform in Brazil. 2017

The role of the government under growing pressure For years, experts globally have expressed concerns about the sustainability of pay-as-you-go social security systems. These systems

are designed as such that today’s workers are contributing and paying for the benefits of today’s retirees. Due to increases in longevity

and lower fertility rates, populations are aging with retirees living longer than the system was initially designed for – compounded with

a smaller portion of current workers paying into the system. Brazil is a prime example. According to the U.N., in 1950, the median age

in Brazil was 19. This is expected to double to 38 by 2050. This average is likely to be inflated by the proportion of the population aged

60+ in Brazil: the U.N. projected an increase from five percent in 1950 to 24 percent by 2050.7 The OECD predicts that those aged 65 and

above will make up 38 percent of the Brazilian population by 2050 – a phenomenal rise from just 7.6 percent measured in 2010.8

Asked what action the government should undertake to address the growing cost of government pensions, just seven percent of people

globally think the government should do nothing, and that social security provision will remain perfectly affordable in the future. In

Brazil, the proportion is double at 14 percent, representing a not-insignificant group resistant to change. While globally, the most

commonly-held view is that the government should increase overall funding for social security through raising taxes without reducing

individual payments (34 percent), in Brazil this view is far less popular, with just 19 percent feeling this way. In Brazil, the most common

belief is that the government should instead reduce the cost of social security provision by reducing the value of individual pension

payments without having to increase taxes (26 percent) – far exceeding the global average holding this sentiment (16 percent). People

in Brazil show an appreciation for the scale of the issues facing their government, but there is some reluctance as to how to settle the

bill. However, a quarter of people in Brazil think the government should adopt a balanced approach with some reductions in individual

payments and some increase in tax (in line with the global average, both 26 percent).

Chart 4 – A quarter of people in Brazil think the government should increase Social Security funding without reducing the value of individual payments

Global

BrazilDon't know

16%

18%

The Government should not do anything. Social Securityprovision will remain perfectly a�ordable in the future

14%

7%

The Government should reduce the overall cost of Social Securityprovision by reducing the value of individual pension payments,

without having to increase tax

26%

16%

The Government should take a balanced approach with somereductions in individual payments and some increases in tax

26%

26%

The Government should increase overall funding available forSocial Security through raising taxes without having

to reduce the value of individual payments

19%

34%

8 | The Aegon Retirement Readiness Survey 2018

Changes in employment and the impact on employer benefits Clearly the Brazilian state pension system is nearing crisis point,

yet how this should be addressed is less certain. Many of the

megatrends discussed earlier in this section have also led to

changing employment arrangements, as well as changes in the

pension schemes offered by employers – particularly within Brazil’s

public sector, alongside the generous benefits of social security

payments disincentivizing Brazil’s informal workforce to participate

in the pension system. Individuals across the labor market in Brazil

face a further layer of uncertainty for their financial futures in

retirement as the role played by employers continues to evolve.

It is increasingly common for workers to change employers several

times over their careers and possibly become self-employed at one

time or another, and this is seemingly only set to increase as the

2017 Labor Reform is enacted in Brazil, which shines a light on

freelance working. Traditional defined benefit plans, which were

designed to fund the retirement of long-service workers with a

shorter life expectancy, are no longer an effective retention tool or

sustainable from a cost perspective. Instead, employers are shifting

to offering employee-funded defined contribution plans in which

the employer may or may not make a contribution. In doing so,

employers are not only expecting workers to self-fund a greater

portion of their future retirement income, but also to bear more risk

in managing the assets.

Mainly imposed by law or required by unions, a whole range of

benefits are offered to workers in Brazil.

However, provision of plans to aid workers entering retirement are

by no means ubiquitous: More than half (54 percent) of Brazil’s

workers say they are offered the ability to work past normal

retirement age, compared to 47 percent globally – perhaps

understandably, given the younger retirement age in Brazil. Brazil’s

workers are also more likely to have access to flexible working

hours (54 percent vs 49 percent globally). However just 43

percent of Brazil’s workers enjoy retirement plans with employer

contributions, while 28 percent have access to a phased retirement

program providing a transition into retirement. While Brazil’s

employers perform an important role there is still room for further

improvements.

The Aegon Retirement Readiness Index and the role of individuals The role the individual takes in retirement preparation is gradually increasing, but has further to go. The Aegon Retirement Readiness

Survey (now in its seventh year) measures the level of retirement planning workers undertake as responsibility gradually shifts towards the

individual. The ARRI provides an annual score based on responses to six separate questions: three broadly attitudinal (Questions 1,2, 3) and

three broadly behavioral (Questions 4,5,6). These questions are illustrated in the diagram below.

Chart 5 – More than half of workers in Brazil are offered the ability to work past the normal retirement age

Brazil Global

Basic salary 87% 79%

Vacation/ paid time off 87% 77%

Convenient location of workplace 71% 67%

Medical health insurance 64% 57%

Opportunities for career progression 58% 51%

Overtime and bonus pay 56% 54%

Ability to work past the normal retirement age 54% 47%

Flexible working hours 54% 49%

Life insurance 49% 40%

Access to good training provision 45% 47%

Retirement plan with employer contributions 43% 43%

Retirement plan without employer contributions 30% 27%

Phased retirement or other employer programs providing for a transition into retirement 28% 29%

Stock purchase plan 19% 21%

The Aegon Retirement Readiness Survey 2018 | 9

What factors shape the ARRI score?

The ARRI ranks retirement readiness on a scale from 0 to 10. A

high index score is between 8 and 10, a medium score between

6 and 7.9, and, a low score being less than 6. (For additional

information about the ARRI and its methodology, see appendix 1.)

With an ARRI score of 6.6 this year, Brazil remains in third place,

improving on last year’s ARRI score of 6.4. The U.S. switches

places with China and the emerging markets make-up the top 3

places this year, with India once again taking the top spot.

Twenty-nine percent of workers in Brazil achieve a high index score

(up from 27 percent in 2017). However, this is still exceeded by

the proportion of Brazil’s workers achieving a low index score (38

percent).

6

25

34

Personal responsibilityTo what extent do you feel personally

responsible for making sure that you will

have sufficient income in retirement?

Income replacementDo you think you will achieve the level of income

you think you will need in retirement?

Financial understandingHow able are you to understand financial matters

when it comes to planning for your retirement?

Retirement planningThinking about your own personal retirement planning

process, how well developed would you say that your

personal retirement plans currently are?

Level of awarenessHow would you rate your level of awareness

on the need to plan financially for your

retirement?

Financial preparednessThinking about how much you are putting

aside to fund your retirement, are you saving

enough?

1

Chart 6 – Brazil remains 3rd in retirement readiness

Indi

a

Chin

a

Bra

zil

Uni

tied

Sta

tes

Ger

man

y

Cana

da

Uni

ted

Kin

gdom

Aus

tral

ia

Net

herl

ands

Turk

ey

Pol

and

Fran

ce

Hun

gary

Spai

n

Japa

n

Tota

l

5.9

4.75.1

5.3 5.4 5.5 5.5 5.7 5.9 6.0 6.0 6.16.5 6.6 6.7

7.3

ARRI score (per country)

10 | The Aegon Retirement Readiness Survey 2018

Part 2 – Improving individual retirement security – the role of financial literacy and auto-enrollment People in Brazil hold a broadly positive outlook on retirement, 64 percent associate retirement with positive words like ‘freedom,’

‘opportunity,’ and ‘leisure’ compared to 68 percent globally. Forty-nine percent of people in Brazil associate retirement with negative

words, such as ‘poverty,’ ‘insecurity,’ ‘loneliness’, falling in line with the global average (50 percent).

This positive mindset can be seen in the retirement aspirations held by people in Brazil, the most common of which include 76 percent

wanting to spend their retirement traveling (the highest response among all countries surveyed), 61 percent spending more time with

friends and family, and 55 percent pursuing new hobbies. Leisure aside, almost a quarter of people in Brazil would like to start their own

business, which is second only to India (23 percent and 31 percent respectively).

Over the years, the survey consistently finds that saving on a regular basis is the best route to retirement readiness. In Brazil, two-in-five

(39 percent) workers are saving for retirement on a habitual basis (exactly in line with the global average). While this is great news, the

picture is by no means perfect. Twenty-four percent of Brazil’s workers save for retirement but only on an occasional basis; 12 percent

aren’t saving at all, although they had saved in the past; 21 percent aren’t saving but do intend to do so; and four percent are not saving

for retirement and have no intention to do so.

Chart 7 – Traveling tops retirement aspirations among people in Brazil

Spending more time with friends and family

Traveling

Don't know 3%0%

NET: Business/ paid work 25%36%

Studying 12%17%

Volunteer work 27%33%

Pursuing new hobbies 50%55%

57%61%

63%76%

Continue working, but in another field 11%17%

Living abroad 12%8%

None of the above 3%1% Global

Brazil

Starting a business 10%23%

Continue working in the same field 15%16%

The Aegon Retirement Readiness Survey 2018 | 11

A certain amount of planning is required to make sure that aspirations can be fulfilled in retirement. In Brazil, two-thirds (67 percent) of

workers already have a plan in place for retirement. Twenty-one percent have committed a plan to writing, compared to just 13 percent

globally. The act of considering one’s future finances and committing to a plan to writing formalizes the process thereby increasing the

likelihood of success.

Saving habitually and setting forth a written financial plan for

retirement can help Brazil’s workers achieve their retirement

aspirations. But do they have the knowledge to make what can be

very important and detailed financial decisions?

Equipping individuals with the tools to better plan for retirement Pressure on the social contract means that ever more responsibility

is falling into the hands of individuals, and away from the experts.

Making a plan for retirement means navigating through many

different financial concepts, many of which require a detailed level

of understanding.

With their permission, the survey uses a framework developed by

Drs. Annamaria Lusardi and Olivia S Mitchell dating back to 2004,

to measure financial literacy. Lusardi and Mitchell created the “Big

Three” questions that measure understanding of compounding

interest, inflation, and risk diversification. Their questions test

the respondents’ actual knowledge of these three topics rather

than their self-reported knowledge. The questions along with the

correct answers can be found in appendix 2.

Respondents in Brazil broadly performed in line with the global

average. Seventy-nine percent correctly answered the compound

interest question; 61 percent correctly answered the inflation

question; and 47 percent correctly answered the diversification risk

question. Overall, three-in-ten people in Brazil correctly answered

all three financial literacy questions, equal to the global average

(30 percent).

Chart 8 – Two-in-five workers in Brazil are habitual savers

Chart 9 – A fifth of workers in Brazil are retirement strategists

38% 4%44%13%Global

32% 1%21% 46%Brazil

I have a written plan I have a plan, but it isnot written down

I do not have a plan Don’t know

Global 39% 12%24% 19% 6%

Brazil 39% 24% 12% 21% 4%

Habitual savers - I always makesure that I am saving for retirement

Occasional savers - I only save forretirement occasionally from timeto time

Past savers - I am not saving forretirement now, although I havein the past

Aspiring savers - I am not savingfor retirement though I do intend to

Non-savers - I have never saved forretirement and don’t intend to

12 | The Aegon Retirement Readiness Survey 2018

Chart 10 – Three-in-ten people in Brazil correctly answer all “Big Three” financial literacy questions

Chart 11 – Women, Millennials and those on low personal incomes are least likely to get all “Big Three” financial literacy questions right

Brazil Global

FL1. The compound interest question – % answering correctly 79% 75%

FL2. The inflation question - % answering correctly 61% 63%

FL3. The risk diversification question - % answering correctly 47% 45%

FL1. + FL2. + FL3. - % answering all three ‘Big Three’ financial literacy questions correctly 30% 30%

Without the requisite level of financial knowledge, it is impossible for people to formulate good retirement plans, or even know what

questions to ask of advisors and retirement plan providers when seeking advice. Low financial literacy may also translate into failure to

engage in any kind of retirement planning.

Low levels of financial literacy are concentrated among certain groups. While 30 percent of people in Brazil correctly answer all three

financial literacy questions, this falls to 19 percent among women, 20 percent among Millennials, 23 percent among those educated

below degree-level and 21 percent among those with a low personal income (Up to 1,699 BRL).

Among those that correctly answer all “Big Three” financial literacy questions (thus having a higher degree of financial literacy) there

are improvements across all areas of their retirement planning. They score higher on the ARRI (6.8 compared to 6.6 overall) and they are

more likely to be saving habitually for retirement (43 percent compared to 39 percent overall). A higher proportion hold a retirement plan

(either written or otherwise). Workers in Brazil who correctly answer the “Big Three” questions are also more likely to feel that they are

able to understand financial matters when it comes to planning for retirement (83 percent compared to 77 percent overall) and are much

more likely to know the value of their retirement savings (77 percent vs 69 percent overall).

Brazil

30%

Men

42%

Women

19%

Millennials

20%

GenerationX

35%

BabyBoomers

43%

Less thandegree

educated

23%

Undergraduatedegree

or above

33%

Lowpersonalincome

21%

Mediumpersonalincome

32%

Highpersonalincome

34%

1966 - 1979

1979 - 2000

1947 - 1965

Correctly answer all ‘Big Three’ questions

The Aegon Retirement Readiness Survey 2018 | 13

Chart 12 – Financial literates are more likely to be habitual savers and say they understand financial planning

Chart 13 – Almost six-in-ten workers in Brazil find the idea of auto-enrollment appealing , but falls to half of low-income workers

Brazil Workers Brazil Financially Literate

Workers (Correctly

answering all “Big

Three” Financial Literacy

questions

ARRI score 6.6 6.8

Habitual savers 39% 43%

Have a retirement plan (either written or unwritten) 67% 72%

Able to understand financial matters when it comes to planning for retirement 77% 83%

“I have a very good idea of the total value of all my personal retirement savings

and investments.”69% 77%

In a world in which workers are expected to exercise more choice

over how much they put aside for retirement, and how those

retirement savings are invested, it is imperative to increase

financial literacy among adults and to provide more education

starting at an early age so that children can gain these vital skills

that will serve them throughout their lives. The lack of widespread

financial literacy is alarming. Addressing it should be a top priority

for policymakers, educators, retirement benefit providers, and

others.

Changing infrastructure to make it easier for individuals to save The strained social contract is necessitating people fund a

greater portion of their retirement. Automatic features in defined

contribution plans are showing great promise in countries where

they have been implemented.

Automatic enrollment is a retirement plan feature in which

employees are automatically enrolled to start saving a portion of

each paycheck, and they only need to take action if they choose

not to save. The survey finds that 58 percent of workers say

that they find the idea appealing. However, some demographic

segments within Brazil’s workforce are somewhat less likely to find

it appealing, particularly Millennials (54 percent) and those with

a low personal income (49 percent). These segments are typically

more vulnerable to not saving enough for retirement and may be

more likely to benefit from it.

Highpersonalincome

Mediumpersonalincome

Lowpersonalincome

Universitydegree

or above

Less thandegree

educated

BabyBoomers

GenerationX

MillennialsWomenMenBrazilGlobal

57%58% 59% 58%

54%

65%

62%

58% 59%

49%

61%

56%

1966 - 1979

1979 - 2000

1947 - 1965

Very or somewhat appealing

14 | The Aegon Retirement Readiness Survey 2018

Part 3 – Potential health issues loom large as retirement concerns The continuity of today’s social contract is in a precarious position. This naturally raises questions and concerns among individuals about

their own retirement. Globally, declining physical health (49 percent) is the primary retirement concern, followed closely by running out

of money (41 percent). The reverse is true among people in Brazil. Here, running out of money is the key concern (52 percent), followed

by declining physical health (48 percent).

On multiple counts, retirement concerns are far more acutely felt in Brazil – indeed, those exceeding the global average by 10 percentage

points or more include: running out of money, not being able to stay active, losing my independence, and not being able to do the things

I enjoy, and needing assistance with basic activities (e.g. bathing, dressing, meal preparation). Brazil’s women meanwhile tend to be more

concerned about facing mental health issues such as depression (41 percent, compared to 33 percent of men) and getting Alzheimer’s

or dementia (47 percent compared to 36 percent of men). Those with a low personal income are more concerned about running out of

money (58 percent) compared to 51 percent of those with a medium income and 44 percent among those with a higher personal income.

Those currently in fair health (50 percent) are more concerned about not being able to do the things they enjoy, than those in excellent

health (36 percent).

Chart 14 – Running out of money and declining physical health top the list of Brazil’s retirement concerns

None of the above 3%6%

Don't know 1%3%

Lacking social engagement 15%19%

Needing assistance with basic activities (e.g.,bathing, dressing, meal preparation etc.)

39%28%

Being alone and isolated 31%26%

Not being able to stay active 45%34%

Not being able to do the things I enjoy31%

44%

Needing to move to a nursing home24%

23%

Not having a daily routine 18%15%

Global

Brazil

Running out of money 52%41%

Declining physical health 48%49%

Losing my independence44%

28%

Getting Alzheimer's or dementia 41%33%

Facing mental health issues (e.g., depression) 37%22%

Losing sense of purpose after stopping work 20%18%

The Aegon Retirement Readiness Survey 2018 | 15

More than half (52 percent) of people in Brazil are concerned about running out of money in retirement. The retirement age in Brazil

remains low compared to other countries covered by the study. However, many workers are feeling the financial need to continue working

into retirement. Almost a fifth (19 percent) retired later than they had planned – exceeding the 12 percent who did so globally. On the

other hand, the fact that a third (32 percent) of Brazil’s fully-retired retired sooner than they had planned brings a different level of

concern, as they will be living longer in retirement than their funds had provided for. Unemployment and job loss (19 percent) along with

ill health (13 percent) are the top two single reasons for people retiring sooner than planned.

In terms of looking after themselves, fortunately Brazilians are a health-conscious group more likely to take out in all health-related

behaviors than the global average. At least half of people in Brazil carry out basic health-related behaviors including avoiding harmful

behaviors such as drinking too much alcohol or smoking (63 percent), eating healthily (60 percent), exercising regularly (54 percent) and

thinking about their long-term health when making lifestyle choices (52 percent).

Just as forming good financial habits early on in life can help individuals achieve a secure retirement, forming good health habits early

can help workers maintain good health into retirement. Employers can play an important role by offering workplace health and wellness

programs.

The vast majority (97 percent) of workers in Brazil would be interested in at least one health and wellness program offered by their

employer. Once again, the difference between the interest workers in Brazil and workers globally express in several of these workplace

health and wellness programs exceeds 10 percentage points, including: exercise programs – either on site or discounts for local gyms (52

percent), preventative screenings and vaccinations (52 percent), on-site health clinic available for routine visits (47 percent), and a health

risk assessment (44 percent).

Chart 15 – A third of retirees in Brazil retired sooner than planned

Chart 16 – At least half of people in Brazil take part in health-related behaviors

Global

BrazilDon't know / prefer not to answer

0%1%

I practice mindfulness regularly (e.g., meditation and relaxation exercises)22%

19%

I think about my long-term health when making lifestyle choices.For example, I try to avoid stress

52%

45%

I eat healthily (e.g., five-a-day portions of fruit and vegetables)60%

56%

I exercise regularly54%

51%

None of the above3%

6%

I avoid harmful behaviors (e.g., drinking too much alcohol or smoking tobacco)63%

58%

I take my health seriously (e.g., have routine medical check-upsand do regular self-checks)

50%

44%

Global 39% 48% 12% 1%

Brazil 32% 47% 19% 2%

I retired at the age I had planned to

I retired later than I had planned to

Don't know/ can't recallI retired sooner than I had planned to

16 | The Aegon Retirement Readiness Survey 2018

Chart 17 – Workers in Brazil are very receptive to workplace health programs

NoneGlobal

Brazil

Don't know1%

4%

Programs for substance or alcohol abuse 11%10%

An app that can help you set wellness goals, measure progressand access information

27%19%

Tools to monitor health goals/biometrics (e.g., BMI/weight loss,cholesterol levels, blood pressure)

36%28%

Ergonomic workstations (e.g., standing desks,adjustable workspace furniture)

36%29%

Health risk assessment 44%30%

Healthy food or snack options at the o�ce 50%41%

Exercise programs – either on-site or discounts for local gyms 52%40%

Programs to stop smoking 14%15%

2%9%

Preventative screenings and vaccinations52%

35%

On-site health clinic available for routine visits 47%31%

Financial incentives for focusing on your health and wellness 42%35%

A wellness coach to o�er guidance and encouragement to helpyou achieve your health-related goals

37%24%

Corporate-sponsored events (e.g., walks, runs, bicycle races) 35%27%

Programs, counseling or therapies to help with mental health issues 30%24%

Education on healthy behaviors (e.g., newsletters,e-mail communications, lunchtime lectures)

29%22 %

Contests and opportunities to win prizes for health-related activities28%

20%

The Aegon Retirement Readiness Survey 2018 | 17

9 Massuda, Hone, Gomes Leles, de Castro, Atun, “The Brazilian health system at a crossroads: progress, crisis and resilience”,

BMJ Global Health. July 2018; v.3(4) e00082910 OECD, “Health Care Resources: Physicians”, OECD Health Statistics 2018. 201811 OECD, “Health expenditure and financing”, OECD Health Statistics 2018. 201812 World Health Organization, “Life expectancy and Healthy life expectancy: Data by country”, World Health Statistics. 2018

With money and health topping the list of retirement-related concerns in Brazil, being able to afford healthcare in retirement may be

adding fuel to the uncertainty. Only 12 percent of people in Brazil are either very or extremely confident that their own healthcare will be

affordable in retirement.

Brazil’s Unified Health System, the Sistema Único de Saúde (SUS), was conceived in the late 1980s and implemented in 1990. Over the

past three decades, Brazil has been working towards Universal Health Coverage (UHC). Although SUS has been widely acknowledged as

an example of a successful public health system reform in Latin America, it is inefficient due to management issues, unequal resource

allocation nationally and budget constraints. In contrast however, some centers of excellence exist across the country, albeit accessing

these is not simple, and requires great effort and specific knowledge from the individual to be able to do so. Last year’s decline in

economic activity and the ongoing political turmoil add more complexity to this scenario.9 Some of the significant problems of Brazil’s

national health system can be cited as the risk of infectious disease – which is still high – and a low ratio of physicians to patients, for

example. In 2010 there were 1.8 physicians per 1,000 population;10 of our survey countries, only Turkey (1.7), China (1.5) and India (0.7)

had fewer – and this is issue is likely to worsen as the population ages further. Other topics that deserve attention are long queues and

waiting times at hospitals and medical clinics, along with outdated and malfunctioning equipment. In more rural areas, the population

suffers with the scarcity of doctors and medicine. In 2013, Brazil spent 6.2 percent of GDP on healthcare,11 the fourth-lowest and

ahead only of the other emerging market nations in our survey. Life expectancy at birth in Brazil stands at 75 years, with a healthy life

expectancy of 66 years. Among the survey countries, only India has a lower life expectancy (68 years).12

Among certain demographic segments, confidence in the affordability of healthcare in retirement is even lower than the countrywide

average of 12 percent. Women (8 percent) are much less confident then men (16 percent) which may be symptomatic of women typically

living longer than men and typically holding less in savings and retirement funds. Brazil’s Millennials are more confident than Baby

Boomers (14 percent vs 9 percent respectively). Young workers need to consider the fact that their health may be less manageable with

age than they expect when calculating their retirement and healthcare costs for retirement.

Part 4: Living and aging in good health and with dignity

Chart 18 – Just one-in-eight people in Brazil are confident that they will be able to afford their own healthcare in retirement

21%

12%

16%

8%

14%

10%9% 8%

9%

24%

Excellenthealth

Goodhealth

Fair healthBabyBoomers

GenerationX

MillennialsWomenMenBrazilGlobal

Extremely or very confident

1966 - 1979

1979 - 2000

1947 - 1965

18 | The Aegon Retirement Readiness Survey 2018

Chart 20 – Home security systems and age-friendly modifications top the list of features and devices people in Brazil envision having added to their homes as they get old

However, the typical Brazilian family home may not always be well-suited to individuals as they grow old and are less able to climb

stairs, or even keep on top of household chores. Through D.I.Y. adjustments and/or new technology, homes can be developed, or devices

installed to help individuals age in place. For people in Brazil, installing age-friendly furniture (50 percent) tops the list. Followed by a

home security system (47 percent) and bathroom modifications (both 47 percent). Ramps and/or grip bars (45 percent) and medical alert

systems (33 percent) are next on the list. Robots to help with chores (14 percent) and robots to provide company (seven percent) fall

towards the bottom of the list in the Brazil – however, these are still very much nascent technology targeted at “digital immigrants” who

lack the natural tech-savviness of younger generations. Perhaps in coming decades, popularity for these innovations may grow, although

cost may prove to be a prohibitive factor.

Robot to keep me company

Global

Brazil

Bathroom modifications 47%43%

Age-friendly furniture 50%37%

Panic buttons to call emergency services 31%37%

Medical alert system to warn about changes in health(e.g., blood pressure monitors etc.)

33%33%

Elevator / stair lift 14%21%

Robot to help with chores, medication management,communication, etc.

14%17%

7%9%

Don't know / prefer not to answer 9%8%

None of the above 9%9%

Wheelchair accessibility 21%18%

Video monitoring 24%20%

Ramps and/or grip bars45%

26%

Kitchen modifications 33%28%

Home security system 47%39%

Feeling confident about the affordability of retirement forms part of the desire to be able to age with a sense of certainty, autonomy and

comfort. It is of particular importance for individuals to remain in their home as they get older.

Aging in place is of at least some importance to 92 percent of people globally. While this proportion is the same among people in

Brazil, they are more fervent in their convictions. Remaining in their own home is extremely important to 43 percent of people in Brazil

compared to 36 percent globally.

Chart 19 – The majority of people in Brazil say it is important to remain in their own home as they get older

Global 22%5% 36%35%1%

2%

Brazil 18%5%2%

31% 43%

Extremely important

Very important

Somewhat important

Not very important

Not at all important

Don't Know

The Aegon Retirement Readiness Survey 2018 | 19

Why do we need a new social contract? The retirement landscape is changing. As megatrends continue,

affecting economies, political overtones and demographics,

the way people live, work, and retire is in a state of evolution.

The current Brazilian social contract, constructed during early

in the 20th century, is crumbling. With this agreement on who

shoulders the responsibility for funding retirement struggling

to stay in place, a new social contract must be formed. This

new social contract must address the need for a redistribution

of responsibility in how people fund and prepare for their

retirement, while ensuring that the necessary tools, resources,

and infrastructure are provided. It must honor the principles of

sustainability and solidarity, while providing adequate safety nets

that enable people to age with dignity, avoid poverty in old age,

and ensure that vulnerable people are not left behind. Achieving

success depends on building new collaborative relationships based

on common objectives, benefits, and trust. .

Who are the partners in the new social contract?Governments take center stage in orchestrating retirement

systems in their countries making sure that everyone, especially

at-risk segments of the population, is included. Employers help

by offering workplace retirement savings and other benefits to

employees. These benefits include skills training, healthcare

and wellness. Individuals must take on a more proactive role in

‘owning’ their retirement security. And new social partners like

academics, think tanks, industry, charities and NGOs will work

more closely in public-private collaborations to share expertise,

innovate, and implement solutions. Schools and financial

professionals have a role in preparing individuals to understand

financial matters and implement financial decisions that can

enhance their retirement security

Nine essential design features of the new social contract are:1. Sustainable social security benefits that serve as a

meaningful source of guaranteed retirement income and avoid

risk of poverty among retirees.

2. Universal access to retirement savings arrangements for

employed workers and alternative arrangements for the self-

employed and those who are not employed due to parenting,

caregiving, or other responsibilities.

3. Automatic savings and other applications of behavioral

economics that make it easier and more convenient for people

to save and invest.

4. Guaranteed lifetime income solutions in addition to social

security benefits. Education for individuals to strategically

plan how to manage their savings to avoid running out of

money, including a knowledge of the options to help them

do so. Governments, employers and others should increase

awareness of, and encourage individuals to take advantage

of, opportunities to have a portion of their retirement savings

distributed in the form of guaranteed income, such as an

annuity.

5. Financial education and literacy so individuals understand

basic concepts and retirement-related products and services.

Individuals must be able to ask good questions and make

informed decisions. Financial literacy must be integrated into

educational curriculums so that young people learn the basics

of budgeting, investing and managing their savings – skills

that can serve them well for the rest of their lives.

6. Lifelong learning, longer working lives and flexible retirement

to help people to stay economically active longer and

transition into retirement on their own terms -- with adequate

financial protections if they are no longer able to work.

7. Accessible and affordable healthcare to promote healthy

aging. Governments play a vital role in sponsoring and/or

overseeing healthcare systems. Employers should provide

healthy work environments and consider offering workplace

wellness programs.

8. A positive view of aging that celebrates the value of older

individuals and takes full advantage of the gift of longevity.

9. An age-friendly world in which people can “age in place” in

their own homes and live in vibrant communities designed for

people of all ages to promote vitality and economic growth.

Part 5: Forging the new social contract

20 | The Aegon Retirement Readiness Survey 2018

Appendix 1 – ARRI methodologyThe 2018 ARRI is based on the sample of 14,400 workers, and has

been developed to measure attitudes and behaviors surrounding

retirement planning. Six survey questions (known as ‘predictor

variables’) are used, three broadly attitudinal and three broadly

behavioral:

1. Personal responsibility for income in retirement

2. Level of awareness of need to plan for retirement

3. Financial capability/understanding of financial matters

regarding plans for retirement

4. Retirement planning – level of development of plans

5. Financial preparedness for retirement

6. Income replacement – level of projected income

replacement

As well as these questions, a dependent variable question is asked

which is concerned with approaches to saving, for which five broad

saver types have been identified: habitual, occasional, past, aspiring,

and non-savers.

In order to create the index score the predictor variables are

correlated with the dependent variable to obtain a measure of

influence (known as an ‘R’ value). The mean scores of the predictor

variables are computed and each mean score is multiplied by its ‘R’

value. The results are summed and then divided by the sum of all

correlations to arrive at the ARRI score.

Note on the effect of increasing the number of survey countries year-on-year The first Aegon Retirement Readiness Survey, published in 2012,

was based on research conducted in nine countries. A separate

survey in Japan was conducted and reported on later that year.

Therefore, 2012 is regarded as a 10-country study. In 2013, two

new countries (Canada and China) were added bringing the universe

to 12. In 2014, a further three countries (Brazil, India and Turkey)

were added increasing the universe to 15. In 2015, the overall

size of the survey was maintained at 15 countries although with

the introduction of Australia and removal of Sweden. In 2018, the

countries surveyed remained the same as 2017, 2016 and 2015.

Australia****

Brazil** Canada* China** ***

France

Germany Hungary

* Added 2013** Added 2014*** In China 2,000 surveyed in total

India Japan The Netherlands

Total survey respondents

Poland Spain Turkey** UK US

16,000 Workers900

per country***

Fully retired people100

1,000

**** Added 2015

Australia****

Brazil** Canada* China** ***

France

Germany Hungary

* Added 2013** Added 2014*** In China 2,000 surveyed in total

India Japan The Netherlands

Total survey respondents

Poland Spain Turkey** UK US

16,000 Workers900

per country***

Fully retired people100

1,000

**** Added 2015

The Aegon Retirement Readiness Survey 2018 | 21

Appendix 2 – Answers to the ‘Big Three’ financial literacy questionsCorrect answers to the ‘Big Three’ financial literacy questions are highlighted in green below.

Question 1 – Suppose you had $100 in a savings account and the

interest rate was 2 percent per year. After 5 years, how much do

you think you would have in the account if you left the money to

grow?

• More than $102

• Exactly $102

• Less than $102

• Do not know

• Refuse to answer

Question 2 – Imagine that the interest rate on your savings

account was 1 percent per year and inflation was 2 percent per

year. After 1 year, how much would you be able to buy with the

money in this account?

• More than today

• Exactly the same as today

• Less than today

• Do not know

• Refuse to answer

Question 3 – Do you think that the following statement is true

or false? “Buying a single company stock usually provides a safer

return than a stock mutual fund.”

• True

• False

• Do not know

• Refuse to answer

22 | The Aegon Retirement Readiness Survey 2018

Contact informationHeadquarters Aegon N.V.Strategy & Sustainability

Mike Mansfield

Program Director – Aegon Center for Longevity and Retirement

Telephone: +31 70 344 8264

Email: mike.mansfield@aegon.com

aegon.com/thecenter

Media relationsTelephone: +31 70 344 8344

Email: gcc@aegon.com

DisclaimerThis report contains general information only and does not constitute a solicitation or offer.

No rights can be derived from this report. Aegon, its partners and any of their affiliates or

employees do not guarantee, warrant or represent the accuracy or completeness of the

information contained in the report.

The Aegon Retirement Readiness Survey 2018 | 23