UK state pension one of the 'least generous in the world', says OECD
04 Dec 2015
The UK's state pension is one of the least generous in the world, according to the Organisation for Economic Co-operation and Development (OECD).
The international think-tank said that only two out of the 34 OECD countries pay poorer pensions than the UK, when measured as a ‘replacement rate’ – that is, when state pension incomes are compared to what people earned while they were working.
The state pension replacement rate for those earning an average salary in the UK was calculated at 38.3 – in other words, typical pensioners earn just over 38% of their working age income. Only pensioners in Mexico and Chile have a lower rate.
Angel Gurría, secretary general of the OECD, stated: ‘Most Governments have made important efforts to bring public pension systems on a sustainable path. While these are steps in the right direction, there is now a growing risk in some countries that future pensions will not be sufficient.’
The OECD measurement underlines the importance of making private provision for retirement. When private and workplace pensions are taken into account, the UK is rated 15th out of 34 OECD countries.
The UK's replacement rate for all types of pension is 71.1 of average work earnings, placing it higher than France (67.7) and Germany (64.7).
The basic state pension is currently worth £115.95, but will rise to £119.30 in April 2016.