How does the UK pension measure up against the rest of the world?

Rectangle_large

Posted on: 14 February 2014 by Ken Reason

A Which? Money study done earlier this year looked at the systems for state pensions in 15 countries around the world and the big thing everyone wanted to know was how did the UK pension compare with its European cousins.

Comparing pensions between different countries is not as simple as, say, public transport systems or banks. The problems arise from the fact that all the countries involved have different criteria for qualification as well as how the entitlement is calculated. A Which? Money study done earlier this year looked at the systems for state pensions in 15 countries around the world and the big thing everyone wanted to know was how did the UK pension compare with its European cousins.
 
The Spanish are top of the pile in Europe, with the maximum state pension in Spain standing at £26,630. The UK is second bottom of the Euro league at £5,500, with the hapless Greeks propping up the table. While this looks bad on paper it has to be noted that many of the countries in Europe have earnings related pensions, including Spain, while the UK's isn't. Thanks to government reforms the British state pension is set to rise to almost £7,500 by 2016, and while this is an improvement it still leaves us trailing behind.
 
You also have to remember that you cannot isolate the state pension of single country and take the figures as cast in stone. How much tax is paid and what people get for those taxes is inextricably linked to pension entitlements. Another thing to consider is the average salary in those countries whose pensions are wage related. Another key issue is private pension savings and, like the Netherlands and Sweden, private pension plans in the UK boost the meagre state pension.
 
The ages at which a state pension can be drawn is a controversial subject to say the least in the UK. For decades is was 60 for a woman and 65 for a man. The pensions act of 2011 means that the women's pension age is increasing faster than men, and while it now stands at 62 by November 2018 it will also be 65. By 2020, the retirement age for both sexes will be 66, 67 by the year 2028 and is set to rise after that in line with the current life expectancy.
 
Britain are not alone in increasing the state pension age however as another 28 countries around the world have the same intention. The table below shows how the UK state pension compares with other European countries. The Spanish statistic may look well awry but there are several components go into this figure including basic pension, contributory pension and several boosting bonuses. While this is the maximum amount few actually get this, hence the difficulty is a true comparison.
 
Spain
 
Their pensions are earnings related with a maximum state pension of £26,630, an average salary of £23,491, with state pension age for both men and women at 65.
 
Germany
 
Their pensions are earnings related with a maximum state pension of £26,366, an average salary of £29,366, with state pension age for both men and women at 65.
 
Sweden
 
Their pensions are earnings related with a maximum state pension of £25,155, an average salary of £37,014, with state pension age for both men and women at 65.
 
France
 
Their pensions are earnings related with a maximum state pension of £15,811, an average salary of £29,817, with state pension age for both men and women at 60.
 
Denmark
 
Their pensions are not earnings related with a maximum state pension of £11,381, an average salary of £45,661, with state pension age for both men and women at 65.
 
Netherlands
 
Their pensions are not earnings related with a maximum state pension of £10,981, an average salary of £35,627, with state pension age for both men and women at 65.
 
Ireland
 
Their pensions are not earnings related with a maximum state pension of £10,415, an average salary of £41,803, with state pension age for both men and women at 65.
 
United Kingdom
 
Their pensions are not earnings related with a maximum state pension of £7,488, an average salary of £31,413, with state pension age for men is 65 and women at 62.
 
Greece
 
Their pensions are earnings related with a maximum state pension of £3,756, an average salary of £7,421, with state pension age for both men and women at 65.
 
About me - I am Ken Reason and my website you can find is called The Pension Bureau. I have been helping people all over the UK with regards to their pensions.
 
 

Share with friends



Do you agree with this Blog? Agree 100% Disagree 0%
You need to be signed in to rate.

Start a new Blog Post

Do NOT follow this link or you will be banned!