Why Britain's state pension is 'one of the worst in Europe'

Why Britain's state pension is 'one of the worst in Europe'

Workers in Britain face a larger financial shock in retirement than European counterparts because their state pension is "one of the least generous in Europe", a study has found.
The state pension of £113.10 a week is worth just a third of the average salary of someone in work, the International Longevity Centre said.
The "replacement" figure was far below the average of for the rest of Europe, where state retirement payments were worth nearly half national average earnings.
Britain ranked 21st out of 27 countries in the list, the ILC found, giving it one of the least generous pensions in Europe.
As a result, workers who failed to amass private savings would see their incomes drop further than European counterparts when they stopped work.
The financial shock contrasted with Greece, where workers received nearly 100 per cent of typical pay from the state in retirement.
The generosity of Greek state pension provision was mirrored in other countries where public finances were under strain.
Spain, Cyprus, Italy and Portugal all appeared in the top 10 – offering a glimpse of why some their governments have been on the brink of default.
Austria, Finland and Belgium all also rated above average, while maintaining relatively strong public finances.
Estonia and Poland offered the least generous pension relative to average earnings, the report found. In Estonia pensioners typically received just a quarter of the income they earned during a working life.
The data was based on an OECD study in 2012 and did not take into account reforms that will set the state pension in Britain at a "flat-rate" £155 a week in 2016.
Helen Creighton, of the International Longevity Centre, said: "The Government aspires for the UK to be the best place in the world to grow old.
"Whilst the UK is by no means the worst place in Europe to grow old, we’ve got a lot to do to top the European league."

Source: By Dan Hyde, The Telegraph's Consumer Affairs Editor 8:38AM GMT 27 Oct 2014


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