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The United Kingdom

uk flag The United Kingdom

The United Kingdom’s retirement income system comprises a single tier state pension supported by an income-tested pension credit; and supplemented by voluntary occupational an personal pensions.  Auto enrolment will cover nearly all employers by 1 April 2017, requring employers to enrol employees in pension schemes with minimum contributions (currently 2% but planned to increase to 8% by 2018) but employees can opt out.

The overall index value for the British system could be increased by:

  • restoring the requirement to take part of retirement savings as an income stream
  • raising the minimum pension for low-income pensioners
  • further increasing the coverage of employees in occupational pension schemes
  • increasing the level of contributions to occupational pension schemes
  • raising the level of household saving
  • accelerating the intended increases in the state pension age.

RRF19921 MMGPI Report 0616 Chart WEB 1000x950 26 UK The United Kingdom


Progressive Results:






2016  60.1 55.5 48.8  83.2
The British index value fell from 65.0 in 2015 to 60.1 in 2016 primarily due to a reduction in the net replacement rate.  However the ongoing introduction of the auto-enrolment process should improve the index value in future years with broadening coverage and an increase in the level of funded retirement benefits.
2015 65.0 64.2 51.3 85.5

The British index value fell from 67.6 in 2014 to 65.0 in 2015 primarily due to the removal of any requirement for retirees to purchase an annuity.  The expected increased coverage from auto enrolment to occupational pension plans has not yet come through in the available international data.

2014  67.6  69.8  52.4  85.4

The British index value increased from 65.4 in 2013 to 67.6 in 2014 due to several factors including higher contributions through the continued introduction of auto enrolment.






The British index value increased from 64.8 in 2012 to 65.4 in 2013 due to a number of small changes.





The British index value fell from 66.0 in 2011 to 64.8 in 2012 primarily due to a significant reduction in pension coverage as indicated in the latest OECD information, where they relied on survey data rather than the previously used administrative data which had multiple counting issues.





The British index value rose from 63.7 in 2010 to 66.0 in 2011 due to an increase in both the adequacy and sustainability sub-indices. The main reasons are an increase in the net replacement rate, a higher household saving rate and an increase in the pension coverage indicator.





The British index value fell slightly from 63.9 in 2009 to 63.7 in 2010 due to the effects of the global financial crisis which were offset by the positive effects of the new indicators.





Media 2016:
UK Fall out of top 10 countries with the best pensions for the first time
Media 2015:
2015 Melbourne Mercer Global Pension Index: Pensions freedom pushes UK down the index
UK pension system narrowly escapes ‘C’ grade under fears of sustainability
Pensions freedom pushes UK down the index
Freedom and choice blamed for weakening UK savings system
Pension freedoms should be reversed, say researchers
Media 2014:
Reform “threatens” UK’s global pension ranking
Poorly designed pensions leave savers in the dark
UK pensions system given a ‘B’ grade
Budget freedoms will see UK slip down international pensions ranking
Pensions – Articles – UK pensions system ranked 9th in the world
UK pension system ranked 9th in the world

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Link to Victorian Government (Victoria Online) the Mercer Australian website Australian Centre for Financial Studies