The United Kingdom 2011

The United Kingdom’s retirement income system comprises a flat-rate basic pension supported by an income-tested pension credit; an earnings-related pension based on revalued average lifetime salary; and voluntary private pensions, which may be occupational or personal. Most of the larger voluntary occupational pensions are currently contracted-out of the earnings-related social security benefit.

The following table shows the position of the United Kingdom when compared to the 15 other countries and some of the indicators that either scored relatively well or poorly.

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

• raising the minimum pension for low-income pensioners
• introducing a level of mandatory funded contributions
• increasing the coverage of employees in occupational pension schemes
• raising the level of household saving

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-indexes.  The main reasons are an increase in the net replacement rate, a higher household saving rate and an increase in the pension coverage indicator.