Britain may have trailblazed the welfare state by introducing the National Health Service and benefits ahead of the rest of the world, but the state pension is the second worst – only beating the payment offered in Mexico.
Even worse, the government cannot afford to fund increases and the only way to improve income in retirement is by contributing to a private pension.
The shock findings come from a global report looking at state provision for retirement by the Organisation of Economic Co-Operation and Development (OECD).
The OECD calculates that the average British worker will only receive a third of their average working income when they retire – and thousands of expats with frozen state pensions will fare even worse.
The British state pension languishes in the doldrums of comparative retirement payments worldwide and is half of what pensioners can expect from their government in Italy.
Disappointment
The statistics will come as a huge disappointment for millions approaching retirement without adequate savings and those in work who are not saving into a pension at all.
The OECD reckons that someone fully paid up with 30 qualifying years of national insurance contributions in Britain can expect a state pension on 32.6% of their working wage when they retire.
Only Mexico has a worse state pension – paying 28.5% of the average working wage on retirement.
The study reveals Italians will cash in with more than 70% of their former working wage, while those in France and Australia will receive more than half.
One fact highlighted by the OECD report is the state pension is weighted in favour of the low paid, who pick up nearly 56% of their working wage.
Pension reforms
Although the OECD urges everyone to boost the state pensions with a private pension, official figures show only 35% workers are employer schemes and the number paying into private pensions is even less.
The report praises the government for starting pension auto-enrolment for workers. Looking at the figures, the research shows that if savers put aside 8% of their income for their full working life, they would bring their pension incomes into line with those paid in Australia and France.
Italy topped the OECD table. State pension payments are so good, only 13% of workers pay into an employer or private pension, although the retirement age has been pushed up to 67 years old.
In Britain, the government intends to reform the state pension by offering a flat rate £144 a week index-linked payment.
Where have the previous comments gone ?
The UK is the only member of the OEDC who openly discriminate against their pensioners by denying some of them their indexed pension when all have qualified. David Cameron was consulted about clause 20 during the 3rd reading of the new Pensions Bill in the House of Commons. He declined any intervention and said to leave things as they are thereby condoning this draconian policy and supporting discrimination. Is he really that stupid or just sick ? Answers on a postcard to 10 Downing Street. No prizes given for best answer.