The British State Pension is one of the worst retirement benefits offered worldwide, according to new research.
The Organisation of Economic Cooperation and Development (OECD) has looked at state benefits provided to retirees and branded the government’s much-vaunted triple lock as unaffordable.
The triple lock guarantees the State Pension will rise each year by the highest of:
- The cost of living increase measured by the Consumer Price Index
- Average wage increases
What the experts say about the State Pension
Here are some points the OECD discovered about the State Pension:
- The State Pension pays the lowest amount compared with most countries in the OECD
- At 16% of average earnings, the benefit level is low in comparison to many countries – the OECD average is 20.5%
- The flat rate State Pension starting in April 2016 should improve the finances of new pensioner.
- The UK is one of few countries that has different retirement ages for men and women, although they will equalise in 2018 at 65 years old.
- The UK will have one of the highest state retirement ages in the OECD in 2028, when it reaches 67 years old
Looking at pensions in a global perspective, the OECD expects lifestyles and working patterns to change.
Tackling pension challenges now
“Many retiring now have had steady jobs throughout their lives, but this will change to intermittent employment and career changes in the future,” says the report.
“No one can expect a job for life anymore and unemployment rates among younger age groups are high. Time out of work means people cannot save as much as they would like and that the state has to take up the slack with benefits.
“Governments need to look at what they need to do to make state pensions more affordable now.”
Generally, the report explained, governments need to do more to alleviate pensioner poverty as their working populations age and discusses concerns for workers in a low-growth, low interest rate economic environment where savings do not grow at a fast rate.