We hear great things about the future. We won’t have to drive anymore as mobility innovates, less people will live with hunger, and more people will live longer because of medical advancement. At some point we might not even have to think anymore!

But are we ready for this change? Our current welfare models are not built for people living for such a long time. At the same time young people don’t have the financial literacy to deal with these new models and ways of getting money. Financial literacy means being able to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. Around 1 in 4 students from 15 countries who participated in the Organisation for Economic Co-operation and Development’s (OECD) Programme for International Student Assessment test of financial literacy were unable to make decisions on everyday spending and do not understand more complex issues, such as income tax (OECD, 2017).

Even though the 48,000 students that participated in the test do not have an accurate level of financial literacy, they will face more challenging financial choices and more uncertain economic and job prospects because of rapid technological and digital changes and socioeconomic transformation.

Many young people take out loans without thinking enough about the future. Already now, these young people should be thinking about a time when they are old and cannot or don’t want to work anymore. How are they going to build a pension? Currently there are automated saving plans, some set up by the government or by your employer. There is some evidence that the younger generation is saving more by themselves, but an automated saving plan for everyone is necessary. For example, the amount of freelancers in EU grew by 24% between 2007 and 2015 (Staffing Industry Analysts, 2016). How will they build a pension without an automated savings plan? Are people aware of their financial situation and how that situation might change during their lifetime?

As all Eurapco Partners have a mutual background, they are concerned with societal issues like these and I believe that organisations should be concerned with these developments, just as much as with hot topics like insurtech and innovation. Finding long-term solutions is what the Eurapco Partners are collaborating on at the moment. This topic is not only about fixing financial literacy, but also finding a long-term care solution and considering new pension methods. So, this topic is more closely related to insurance than most might think.

So, what can we do about it? The OECD published a report on trends and developments on financial education in Europe. The Eurapco Partner countries are in different stages of development, from planning, designing, implementing and revising what was implemented. For example, in the Netherlands there is LEF (Leven en Financien), an organisation offering young people the opportunity to become responsible with money through courses in the Dutch education system.

There are also very innovative examples of trying to improve financial literacy among the younger generation. The Dutch startup Otly, for example, provides a safe digital banking environment for children and parents. The company wants to combine financial technology and financial education. Credit Suisse has also developed a similar concept, Digipigi. This is a special banking package for children with a debit card, an app and even a piggybank that also serves as an alarm clock. Both these innovations work with gamification to educate children on personal finances. Also important to note is the involvement of the parents in this innovation. Parents play a big role in transferring financial values and children that talk to their parents about finances also perform better on financial literacy tests.

These are some examples of small efforts in tackling the gap in financial literacy with the younger generation. What is clear is that it involves many organisations and industries and even family life. Eurapco is aware of these developments and is working closely together with startups like these to provide their customers with a better future for their children.

Improving financial literacy levels in Europe is an important challenge that requires contributions from a wide range of stakeholders. That’s why we try to bring groups of people working in pensions and actuaries together to collaborate on the topic. We need to improve the circumstances for the next generation.


Organisation for Economic Co-operation and Development (2017, May 24). Many teenagers struggle to understand money matters. Retrieved from http://www.oecd.org/newsroom/many-teenagers-struggle-to-understand-money-matters.htm

Staffing Industry Analysts (2016, June 10). EU – NUMBER OF FREELANCERS GROWS BY 24% IN 7 YEARS. Retrieved from https://www2.staffingindustry.com/eng/Editorial/Daily-News/EU-Number-of-freelancers-grows-by-24-in-7-years-38211

Insurance Europe (2017, March 27). Financial education in a digital age. Initiatives by the European insurance industry. Retrieved from https://www.insuranceeurope.eu/financial-education-digital-age-initiatives-european-insurance-industry

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