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| OECD: UK has lowest state pension of any developed country | OECD: UK has lowest state pension of any developed country |
| (about 1 month later) | |
| British workers receive just 29% of their previous earnings, although private pensions bring figure up to near average | |
| Patrick Collinson | |
| Tue 5 Dec 2017 18.50 GMT | |
| Last modified on Tue 5 Dec 2017 22.00 GMT | |
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| Britain’s workers can look forward to the worst state pension of any major country, according to a report by the developed world’s leading economic thinktank. | Britain’s workers can look forward to the worst state pension of any major country, according to a report by the developed world’s leading economic thinktank. |
| The Organisation for Economic Cooperation and Development (OECD) study calculated that a typical British worker will at retirement receive a state pension and other benefits worth around 29% of what they had previously been earning. That compares with an average of 63% in other OECD countries, and more than 80% in Italy and the Netherlands. | The Organisation for Economic Cooperation and Development (OECD) study calculated that a typical British worker will at retirement receive a state pension and other benefits worth around 29% of what they had previously been earning. That compares with an average of 63% in other OECD countries, and more than 80% in Italy and the Netherlands. |
| The report said this expected “net replacement rate” will be the lowest of any OECD country. | The report said this expected “net replacement rate” will be the lowest of any OECD country. |
| The UK population is ageing rapidly, has relatively high levels of poverty among the over-75s, and a much bigger problem with obesity in old age, said the OECD, with 20% of British over-80s classified as obese, compared with 15% in the US and under 10% in Italy. | The UK population is ageing rapidly, has relatively high levels of poverty among the over-75s, and a much bigger problem with obesity in old age, said the OECD, with 20% of British over-80s classified as obese, compared with 15% in the US and under 10% in Italy. |
| The TUC general secretary, Frances O’Grady, said: “Working people in Britain face the biggest retirement cliff edge of any developed nation. We are letting down today’s workers if we can’t provide them with a decent retirement income.” | The TUC general secretary, Frances O’Grady, said: “Working people in Britain face the biggest retirement cliff edge of any developed nation. We are letting down today’s workers if we can’t provide them with a decent retirement income.” |
| However, on some measures Britain’s pension system is performing better than many other OECD countries. The OECD noted that the new single-tier pension (currently £159.55) will be worth 30% more than the old state pension (currently £122.30) but added, “there is a long transition period and current retirees will not see a difference”. | However, on some measures Britain’s pension system is performing better than many other OECD countries. The OECD noted that the new single-tier pension (currently £159.55) will be worth 30% more than the old state pension (currently £122.30) but added, “there is a long transition period and current retirees will not see a difference”. |
| The UK also fares well on employment rates among older adults, and with the introduction of auto-enrolment in 2012, the downward trend in private workplace provision has been reversed. | The UK also fares well on employment rates among older adults, and with the introduction of auto-enrolment in 2012, the downward trend in private workplace provision has been reversed. |
| While the UK has the worst “mandatory” entitlements such as the state pension, it has a much bigger private pension system. | While the UK has the worst “mandatory” entitlements such as the state pension, it has a much bigger private pension system. |
| The OECD said the UK has $2.2tn in private pension assets, equal to 95% of GDP, one of the highest levels of private saving in the world. While the US, Switzerland, the Netherlands and Denmark had figures above 100% of GDP, in France and Germany, where state pension entitlements are much higher, private pensions are worth less than 10% of GDP. | The OECD said the UK has $2.2tn in private pension assets, equal to 95% of GDP, one of the highest levels of private saving in the world. While the US, Switzerland, the Netherlands and Denmark had figures above 100% of GDP, in France and Germany, where state pension entitlements are much higher, private pensions are worth less than 10% of GDP. |
| Once the UK’s private pensions are added to the state pension, the average income in retirement for UK pensioners rises to just over 60% of former career earnings, just below the OECD average. | Once the UK’s private pensions are added to the state pension, the average income in retirement for UK pensioners rises to just over 60% of former career earnings, just below the OECD average. |
| A Department for Work and Pensions (DWP) spokesman said: “We have taken decisive action to address our changing population through a new, generous state pension, retaining the triple lock and protecting the poorest through pension credit, reducing pensioner poverty close to historically low levels. | A Department for Work and Pensions (DWP) spokesman said: “We have taken decisive action to address our changing population through a new, generous state pension, retaining the triple lock and protecting the poorest through pension credit, reducing pensioner poverty close to historically low levels. |
| “But there’s always more to do. Thanks to automatic enrolment, around 11 million people will be newly saving or saving more into a workplace pension by 2018.” | “But there’s always more to do. Thanks to automatic enrolment, around 11 million people will be newly saving or saving more into a workplace pension by 2018.” |
| Caroline Abrahams, the charity director at Age UK, said the report should serve as a “wake-up call”. | Caroline Abrahams, the charity director at Age UK, said the report should serve as a “wake-up call”. |
| She said: “Given the current situation, the state pension undoubtedly remains a vital tool in the fight against pensioner poverty, giving millions of older people a small element of financial security in an increasingly uncertain world. | She said: “Given the current situation, the state pension undoubtedly remains a vital tool in the fight against pensioner poverty, giving millions of older people a small element of financial security in an increasingly uncertain world. |
| “But the government must look at how auto enrolment into workplace pensions can work with the state pension to deliver a decent standard of living in retirement for everyone.” | “But the government must look at how auto enrolment into workplace pensions can work with the state pension to deliver a decent standard of living in retirement for everyone.” |
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| Retirement age | |
| Older people | |
| Work & careers | |
| Benefits | |
| Economics | |
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