UK pension rank
The UK’s state pension is among the worst in the developed world only topped by Mexico, according to the think tank, the Organisation for Economic Co-operation and Development, which represents 34 of the world’s biggest economies,
The OECD said UK workers taking home average pay can expect a pension worth just 32.6% of final pay when they retire, compared to a 54.4% average across the rest of the OECD.
Lower earners fare slightly better with a so-called replacement rate of 55.8%, compared to the OECD average of 71%, placing the UK sixth from bottom.
“With the legislated increases in retirement age to 67 for both men and women, expenditure is only expected to increase by 0.5% over the next year 40 years to 8.2% of GDP, well below the OECD average of 11.7%,” the OECD said.
However, it added: “This low level of [public] expenditure reflects the structure of the system which has a low public element in comparison with other OECD countries supplemented by a well-established voluntary private pension component.”
The OECD welcomed plans to automatically enrol employees onto workplace pensions over the next few years. The OECD assumes that workers will contribute 8% of their salaries under auto-enrolment, although experts also warned however of the unrealistic assumptions of investment returns on auto-enrolment pots by the think tank and the Department for Work and Pensions.
www.oecd.org/unitedkingdom/OECD-PensionsAtAGlance-2013-Highlights-United-Kingdom.pdf