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British pensioners worse off than the Irish, Dutch and Germans

Britain - TMG
Britain - TMG

British pensioners are worse off than fellow retirees in a range of countries, accepting poorer retirement provisions than residents of Germany, Ireland, Australia and Chile.

The country's system ranked 15th globally, below a swathe of European countries according to the Mercer CFA Institute Global Pension Index.

This measures state funded and private components of 39 countries’ pension systems based on how secure and sustainable they were and whether they provided enough for people to live on.

The best place in the world to retire was the Netherlands, followed by Denmark. Nordic countries such as Finland, Norway and Sweden also boasted better retirements than Britain, as did Israel, Singapore and Canada.

Britain scored 64.9 points in pension consultancy Mercer’s Pension Index, up from 64.4 in 2019 due to a slight improvement on its "sustainability". It scored highly on “integrity” as Mercer said there savers could trust the system to deliver what it is supposed to.

However, Benoit Hudon of Mercer said there was too much focus on security at the expense of providing adequate retirement income and ensuring the cost to both savers and taxpayers was sustainable.

He added: “There are numerous levers the Government could pull to improve the system, though first a fundamental debate is needed to agree the optimal balance between security, adequacy and affordability."

The world's best pension systems
The world's best pension systems

Britain needed to rethink the "risk" in the system, Mr Hudon said, and find a better balance in promoting safety of retirement savings and ensuring people do not miss out on growing their pots by owning better investments.

Households were not saving enough towards their retirement through workplace pensions, the report also claimed.

This would be improved by having better options for the self-employed and the lowest earners, who are not saving towards their pension due to not being covered by the Government's auto-enrolment scheme. This mandates companies to offer and contribute to workers' pensions.

France scored worse than Britain, ranking 20th in the index, due to a low score for "sustainability”. The report said this was due to a state pension age that was too low with too few older citizens still working and contributing to the system.

The lowest scores were for Mexico, with 36.5 for adequacy, Italy for sustainability (18.8) and the Philippines, receiving 34.8 for integrity.

The report scored systems on "adequacy", income provided by the system in benefits and savings, “sustainability”, whether pension payouts can be maintained, and "integrity", the governance of each system and the protections in place for savers.

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