European workers have put aside $2.5trn less than they need to fund their retirement, condemning many to a penurious old age unless they start saving more, British insurer Aviva said.

The shortfall is equivalent to one-fifth of the EU’s annual economic output and reflects savings habits that have failed to keep pace with lengthening lifespans, according to a study published by Aviva.

Britain’s pensions gap of 26 percent of GDP, is the EU’s biggest, followed by Germany and Spain, whose deficits are equivalent to 24 percent and 18 percent of GDP respectively, the study shows.

Aviva said that without increased saving, European workers will be forced to pay for their old age by selling their homes, putting off retirement, or “accepting a significantly reduced standard of living”.

The insurer urged EU governments to help plug the deficit by adopting national pensions saving targets, warning consumers not to rely solely on state pensions, and boosting confidence in pensions products by creating a Europe-wide quality standard.

Aviva’s estimate of the EU pensions gap, which it claims is the first attempt to gauge the region’s retirement funding shortfall, is based on a calculation of the savings that would be required for those currently in employment to retire on 70 percent of their final salary.