The UK came in ninth place on the list of top pension providers, according to Melbourne Mercer Global Pensions Index 2014. Denmark, Australia, and the Netherlands took the top three positions, the details of which are outlined in the April cover story of Money Management.
Denmark’s pension scheme ATP is compulsory for employees between age 16 and 64 to pay into, while their employer pays two-thirds of the contribution. The pension can be paid out as a lump sum of the balance is below a certain amount, or an annuity can be purchased.
Under Australia’s Superannuation Fund, all staff aged between 18 and 70 who earn more than A$5,400 (£2,753) a year, receive a minimum contribution of 9.5 per cent of their annual salary from their employer, and is expected to rise to 12 per cent by 2019.
Of whether the UK can learn from pension schemes abroad, Tony Stenning, head of UK retail at BlackRock, said, “Absolutely. As compared to other markets further levels of flexibility can be introduced in the UK markets. With greater flexibility comes greater responsibility, but it is good because it will allow people to save more and take control of their funds.
“Come April, there will be more flexibility in the UK which will be in line with other markets such as Australia, New Zealand, and the US.”
Kiwisaver, the pension saving scheme in New Zealand, was introduced in 2007 to encourage saving. Any new employees between age 18 and 65 are automatically enrolled into their employers pension plan, and have four weeks to opt out.
Under the 401(k) plan, which is sponsored by the employer, in the US, an employee can save and invest a portion of their salary before tax, and no tax is paid on the funds until withdrawal.
As the pension freedoms in the UK come into effect next month, it is important to heed the lessons from successful schemes in other countries and to educate employees about the benefits of saving.
