Retirement and financial education

1) AXA Retirement Scope: an effective tool for raising awareness

AXA, which provides pension services for millions of clients in various countries, has built up in-depth knowledge of consumers' behaviors, needs and priorities. In this way, the Group is using its international AXA Retirement Scope project, put in place with an external research company, to help people better understand retirement issues and challenges and to enable them to learn from real-life experiences around the world so they can live better lives.

This annual survey, whose findings sometimes go against widely accepted ideas, highlights the benefits of living the retirement years as a rich, active period and suggests ways to attain those benefits. The results show how people who are prepared approach and experience their retirement better. The research underlines the advantages of taking an active, dynamic approach to life, during the working years and beyond.

A key aspect of the awareness process, these findings have been widely covered in the media, paving the way for growing awareness and debate at national level. Interest in this research also spread to public authorities in 2005-2006: in Singapore, the government organization responsible for financing pensions asked for a presentation to be given to its staff. This research also triggered a parliamentary debate in New Zealand, while the Belgian prime minister quoted the survey as a reference in an interview and the French government also consulted with AXA.

The Retirement Scope survey has also been designed to help us build up a clearer picture of how health-related issues are reflected in the attitudes and behavior of both working people and retirees worldwide. There is no magic recipe for a happy retirement. However, this research is providing insight into how to be confident about a successful retirement, pinpointing a number of factors - financial preparation, cultural background, sociological issues, etc. - that contribute to this "success".

Lastly, the survey's findings are helping AXA's teams to identify the solutions that will enable the Group's clients to better meet their financial needs with respect to retirement.

2) Independent retirement market education in the USA : the Variable Annuities Knowledge Center

What are Variable Annuities ?

A retirement income dilemma has gradually developed in the United States' retirement savings market :

• Retirees are living longer (eg. Within a married couple aged 60, there is a 62% chance that one individual will live to age 90) ;
• Retirees can no longer rely on the government or employers (the future of government-provided benefits being questioned, and corporate-defined benefit plans are becoming rare) ;
• Individual savings are insufficient to fill the gap ;
• ... yet, 77 million "Baby Boomers" are entering retirement.

"Variable Annuities" (VA) are an efficient financial product response to this situation. A variable annuity is an investment portfolio, that allows investors to defer taxes, while also providing guaranteed payment upon death, and the option to guarantee a stream of income. This range of products provides predictable payments in a fashion similar to a salary. A portion of the payments may be invested in variable funds (stocks, bonds, or other funds), the value of which fluctuates over time, hence the term "variable".

Unfortunately, the VAs' reputation has been tarnished by occasionally irresponsible selling tactics, especially by fringe operators which disregarded suitability requirements, especially around senior citizens. VAs have been strongly criticised by the mainstream US media, creating significant distrust in such products, although they are technically efficient to address retirement issues.

VA education : the Variable Annuities Knowledge Center

In this context, AXA decided to enhance the debate surrounding VAs as an industry educator, to build trust through honesty and knowledge sharing, and to broaden the spotlight to illustrate the entire VA range. The development of the Variable Annuities Knowledge Center (VAKC) website is a key element supporting this approach.

The VAKC website is designed to provide audiences with unbiased, fact-based information about VAs and their interest for long-term investment needs. The VAKC includes educational information focused on :

• What are VAs, their components, and the types of VAs available.
• The benefits and risks associated with VAs.
• Considerations to help determine if a VA suit personal situations and various future financial needs (the "VA suitability calculator").
• The types of fees which can be expected to incur when purchasing a VA.
• Tips for choosing and interacting with financial professionals when making investment decisions.

To help ensure that the information presented is accurate and unbiased, the website's content is overseen by the KAKC's independent editorial Advisory Board. This board is composed of experts from both within and outside of the VA industry. No investment advice is offered on the website. Rather, the website urges visitors to seek external financial advice.

A strong response to the VAKC has been reported to date : 38,000 unique visitors, 252,000 page views and an average visitor session of 13 minutes between the July 2005 launch and April 2006.

3) Education on financial advice in the UK: AXA Avenue

An original initiative aimed at educating the market about retirement-related issues, and more specifically the importance of financial advice, is also underway in the UK.

In 2005-2006, AXA UK conducted an unusual social experiment entitled "AXA Avenue", which has caused a sensation. Over one year, an avenue in Brighton was the subject of a social experiment looking at financial education, based on two groups of families on either side of "AXA Avenue". Families from the first group have enjoyed personalized financial advice, while families from the second have been in charge of their own finances. Regular comparisons are being made, looking to prove that a household receiving help from an adviser is better equipped to take decisions than a household that does not receive any advice.

A stress specialist has also been on hand to monitor the effects of concerns over financial issues on participants' health, while a dedicated site has been set up presenting the project, progress made and its findings.

The seriousness of this project and AXA's commitment to analyzing the impact of financial education of individuals have been rewarded by the panel of experts for the PR Week Awards. However, this campaign's influence goes way beyond the communications sector, since financial education also represents a key concern for the British government and media.

The findings from this experiment show that the investment decisions made by households that have received personalized financial advice have achieved better performance levels than the other groups. This trend can be seen both in terms of a reduction in debt and an increase in returns on investments for this first group. Extrapolating this reduction in debt - over the first quarter - to the rest of the UK population would mean a reduction in household borrowing by around 29 billion pounds over three months. These results notably go against the widely held view among British people that debt has simply become an unavoidable reality.

4.2) Financial education in the US

Furthermore, helping clients get a better handle on retirement issues involves making sure they understand what is at stake. To this end, AXA Equitable is offering seminars for its clients aimed at making them more knowledgeable about financial matters.

The seminars are strictly educational, not focused on products or selling. They tell clients and prospects what issues should be considered as they get ready to retire, along with practical things to begin implementing their plan. The aim is simultaneously to "disturb and educate".

Furthermore, as part of the Group's "Community Philanthropy" drive and through the AXA Achievement program, AXA Equitable is offering scholarships on a range of areas relating to financial education. These include estate planning, financial planning (wealth management, asset allocation, financial fitness strategies), retirement strategies, as well as long-term care considerations, or "ageing" planning.