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UK pensions among the lowest in OECD

The UK provides one of the lowest state pensions for employees on average earnings among developed countries.

A report by the Organisation for Economic Cooperation and Development places the UK 26th out of 30 member countries in terms of the percentage of after-tax earnings it pays to pensioners.

A worker on average wages can expect to receive 48 per cent of after-tax earnings compared with an average of 70 per cent in other countries.

The report takes into account the level at which pensions are paid, the age at which people become eligible to receive a pension, life expectancy and how pensions are adjus- ted after retirement to reflect growth in wages or prices.

Although described as complex, the UK state pension system fared better in other areas, being seen as cheap and helping to redistribute wealth.

The report found that nearly all OECD countries link pensions to prices, including the UK and says systems which adjust pensions in line with average earnings could cost the state 20 per cent more.

Hargreaves Lansdown head of pensions research Tom McPhail says: “This does not come as a surprise. The idea of a UK Government being generous with pension provision has been outdated for 20 years. Anything less than a fundamental rethink after the Turner report will be a failure.”


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