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02 Dec 2015

Britons to have worst pensions of any major economy, study finds

A new study has revealed that UK workers can expect the worst pensions of any major economy and the oldest retirement age of any other nation, The Guardian reports.

According to the Organisation for Economic Cooperation and Development (OECD), once state and private pensions are combined the average British worker can anticipate earning 38% of their salaries when they retire.

To put this into perspective, the think tank noted that this figure is 90% in the Netherlands and Austria, and 80% in Italy and Spain. What´s more, only workers in Mexico and Chile faced a worse prospect when they come to retire.

Perhaps surprisingly, Turkey was the country to come out on top in terms of the percentage paid, with the average pension equalling 105% of typical wages.

As well as being paid less, British workers will also have to work longer into their lives than anyone else on earth before they can qualify for a state pension. In the UK, the state pension age is set to increase to 68 over the next two decades; an age matched only by Ireland and the Czech Republic. The average retirement age for the rest of the world will be 65.5 by as far ahead as the 2050s.

The countries with the lowest age for retirement are Belgium and France, both with a state pension age of 62; however, both men and women in France tend to retire much earlier - 59.4 for men and 59.8 for women.

Britain´s auto-enrolment scheme is expected to encourage more people to save for their retirement, providing millions of low-paid workers with access to a private pension. However payouts are not expected to be high as contribution rates are still relatively low.

Commenting on the findings, Hargreaves Landown´s pensions expert, Tom Phail, said that it made “embarrassing reading for the politicians who have been responsible for the UK´s pensions over the past 25 years.”

“Even though [the state pension] is improving for lower earners now, average payouts will not be rising,” he noted; continuing: “It is in the private sector though where the real damage has been done; the collapse in final salary pensions has not yet been replaced with well-funded alternatives.”

Copyright M2 Bespoke 2015

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