UK’s pension system ranked among the best in the world

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The UK’s pension system has been ranked among the top ten in the world, leapfrogging Germany, Switzerland and Ireland in the past year.

Britain came in the top ten best places in the world to retire to; coming 9th in 2021 and moving ahead of other European nations after ranking 15th last year. This is according to the Mercer CFA Institute’s annual Global Pension Index.

The report measured state and private retirement income of the world’s 43 most developed nations and ranked how secure and sustainable they were and whether they provided enough for people to live on.

Iceland came out on top of this year’s rankings, which used three measurements: ‘Adequacy’, ‘sustainability’ and ‘integrity’ to calculate the rankings.

In Iceland, it was found many people work well into their old age, helping the country’s overall ranking.

The UK scored 71.6 up from 64.9 in 2020. This was down to an improvement on its ‘adequacy,’ which measures income provided by the system in benefits. The average score across all countries was 60.7. 

The report did say Britons should consider borrowing less and employers paying more into pensions if the UK was to rank even higher in the future. At the moment, employers and workers only have to pay a minimum of 8 percent of salary every year into their pensions.

Germany, France and Spain all scored worse than the UK – ranking 14th, 21st and 24th respectively. The report stated Germany would improve its score if politicians increased basic benefits for pensioners. France scored poorly because its state pension age was too low and it had too few older citizens working and contributing, making it unsustainable.

Thailand was found to be the worst country to retire to, with the Government income provision scoring low on adequacy. Meanwhile, Italy ranked lowest of all on the “sustainability” measure, which assesses whether pension payouts can be maintained.

One of the issues highlighted by the study was the gap between men’s and women’s pensions. It was found that in every system around the world, higher retirement income is provided for men than for women.

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