• Home
  • News
    • People moves
    • Africa
    • Asia
    • Australia
    • Canada
    • Caribbean
    • Domicile
    • Europe
    • Latin America
    • North America
    • Middle East
    • US
    • US
    • UK
  • Products
    • Funds
    • Pensions
    • Platforms
    • Insurance
    • Investments
    • Private Banking
    • Citizenship
    • Taxation
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Directory
  • Video
  • Advertise with us
  • Directory
  • Events
  • European Fund Selector
  • Newsletters
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
  • Advertise with us
  • Directory
  • Events
    • Upcoming events
      event logo
      Sustainable Investment Festival 2021

      The Sustainable Investment Festival will run online from 22-25 June and will include thought-provoking presentations from renowned keynote speakers, innovative breakout events and sessions specifically tailored to meet the information needs of fund selectors, financial advisers, pension consultants, trustees and scheme managers.

      • Date: 22 Jun 2021
      • Online, Online
      View all events
  • European Fund Selector
International Investment
International Investment

Sponsored by

Sharing Alpha
  • Home
  • News
  • Products
  • Fintech
  • Regulation
  • ESG
  • Expats
  • In Depth
  • Special Reports
  • Video
  • Pensions

UK pensioners worst off in OECD table of retirees’ benefits

UK pensioners worst off in OECD table of retirees’ benefits
  • Eugene Costello
  • 05 December 2017
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  

Pensioners in the UK are hit hardest when it comes to pension benefits and quality of life, a just-published report by the Paris-based Organisation for Economic Cooperation and Development (OECD) has found.

Relative to pre-retirement earnings, UK retirees receive less than half of what their counterparts receive on average among OECD nations, with a retirement income of just 29% of their in-work pay, compared with the OECDX average of 63%.

Related articles

  • Soaring UK life expectancy statistics could see state pension age rise to 70: AJ Bell
  • 'Crossfire' concerns after UK Lords call for pension tax relief examination
  • UK gov’t spends £18m on largely ignored Pension Wise adverts
  • UK confirms non-dom reforms as 2017 Finance Bill goes live

The report was based on analysis of mandatory pensions, such as the state pension, and did not take into account private pension provision, placing the UK bottom of all OECD countries, behind relatively poor nations such as Mexico.

Turkey topped the list for disposable income post-retirement, with 102% of in-work earnings available on average.

Analysis was based upon a system called the “net replacement ratio”, which looks at disposable income pre- and post-retirement once taxation has been taken into account, both direct and “indirect”, such as national insurance contributions.

The UK’s low state pension was the cause of “high levels of pensioner poverty”, said the OECD. While it said that the single-tier state pension, introduced last year, would help the situation, it would only do so after many years, stating that “current retirees will not see a difference”.

Although UK citizens could boost their retirement earnings through private pension provision, the OECD expressed concern at the apparent lack of a safety net, saying “retirees without such additional sources of revenue are left with few resources.”

The report claimed that virtually one in five of the over-75s are subsisting  below the poverty line, because of the “low level of the state pension”.

Strong private sector for pensions provision

Private pensions providers were unsurprisingly quick to point to the fact that the report only applied to the state pension while the private pensions provision sector was booming.

Senior analyst Tom Selby, pictured above, at online pensions and investment provider AJ Bell pointed out that pension systems around the world are shaped by a combination of social, economic and political factors. “Some place a greater emphasis on collective provision,” he said, while others – including the UK – have a strong private pillar to supplement state income.

“This report emphasises the importance of maintaining incentives to save and ensuring people have confidence that the rug won’t be pulled from under their feet by politicians prioritising short-term cash generation over long-term policymaking.

“Countries such as Sweden have managed to build cross-party co-operation into their political system to encourage stability – a similar deal in the UK could be transformational and encourage more people to save earlier for retirement.

“The flexibility of the pension freedoms has clearly made retirement saving more attractive – a huge positive of the reforms – but equally there is a danger people will withdraw too much too soon and end up falling back on the state. We expect the issue of sustainability of withdrawals to become increasingly prominent as more information comes out on the behaviour of retirement savers in drawdown.

“In strained economic times and with longevity continuing to rise globally, Governments everywhere will have difficult decisions to make about the balance between state and private pension provision. In the absence of a Jeremy Corbyn administration, it’s hard to imagine the UK reverting back to paternalism any time soon.”

And head of policy at pensions broker Hargreaves Lansdown Tom McPhail agreed, when contacted by International Investment, saying “As the report rightly points out, the provision of state pension benefits is among the lowest in the developed world.

“However this is offset by the very substantial provision of privately funded pensions, primarily through the workplace.

This means UK retirees have pension benefits which in total are comparable to many other nations.”

 

 

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
  • Topics
  • Pensions
  • UK
  • AJ Bell
  • Pensions
  • Tom Selby
  • UK State Pension

More on Pensions

UK government must 'U-turn' on pension age change

  • Pensions
  • 09 April 2021
STM 'minimised' exposure to historic Carey Pensions issues

  • Pensions
  • 09 April 2021
Pensions Ombudsman to restart Carey Pensions claim investigations

  • Pensions
  • 07 April 2021
Covid success to see cashing in 'surge' over pension freedoms

  • Pensions
  • 06 April 2021
SIPP investor Adams wins Court of Appeal battle against Carey Pensions

  • Pensions
  • 01 April 2021
Back to Top

Most read

Will Cardano's coming of age hit Bitcoin and Ethereum?
Will Cardano's coming of age hit Bitcoin and Ethereum?
UK government must 'U-turn' on pension age change
UK government must 'U-turn' on pension age change
UK life office CEO dies
UK life office CEO dies
Dubai financial regulator names new chairman
Dubai financial regulator names new chairman
US regulator targets 'opaque' money laundering in beneficial ownership notice
US regulator targets 'opaque' money laundering in beneficial ownership notice
  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017
Loading