The UK state pension has been revealed as one of the worst in the world, with countries such as Mexico and Chile yielding a worse pension scheme, the Independent reports.
According to the Organisation for Economic Co-operation and Development (OECD), the report revealed that average earners without a private pension will end up with the third worst income equivalent when they retire, while high earners will end up with the worst.
Its figures reveal that UK workers would get around 16% of what they had been earning as a wage if they rely on the state pension, although that will rise to 22% when the new state pension is introduced next April. Basic pensions are equal to 20.5% of average earnings on average across OECD countries, with a high of 40% in New Zealand.
“The analysis makes embarrassing reading for the politicians who have been responsible for the UK’s pensions over the past 25 years,” said pensions expert Tom McPhail of Hargreaves Lansdown.
“The state pension was in steady decline for years and even now, is improving for lower earners but average payouts will not be rising.”
At present the basic state pension is £115.95 and is set to climb to £119.30 next April. But things are set to improve for people who retire from then when the new state pension is launched.
It will pay a flat rate of £155.65 to eligible retirees which will mean many will end up getting more, although those who would have qualified for additional payments through contributions to the state second pension scheme will lose out.
“Most governments have made important efforts to bring public pension systems on a sustainable path,” said OECD Secretary-General Angel Gurría. “While these are steps in the right direction, there is now a growing risk in some countries that future pensions will not be sufficient.”
He warned that some countries, such as Chile, Korea, Mexico, Turkey and the United States, combine relatively high risk of pensioner poverty and low benefits, and should consider increasing the value of their safety-net payments.