Pensions  

UK pensions need to be more sustainable, says Knox

The senior partner at Mercer Australia said the UK would improve its position in the company’s global pensions index following auto enrolment.

But he added there was “some way to go” before it matched Denmark, currently at the top of the table “by a country mile” with a score of 86.1 when measuring the on-going viability of current pension provision.

Speaking at the National Association of Pension Funds conference in Manchester on 17 October, Mr Mercer said: “The UK, with a score of 48, has relatively poor coverage at the moment, a low level of mandatory contributions and government debt that has increased in recent years.”

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Dr Knox said the UK had fared better in other key measures of an effective system such as adequacy of pension provision and integrity, where the UK was placed third out of the 20 countries studied for the index.

Australia scored the highest rating, at 88.1, for integrity within its pension system, which Dr Knox attributed to the government’s recent review of its superannuation system.

Fiona Reynolds, managing director of Principles for Responsible Investment, said Australia’s high score was helped by mandatory enrolment in workplace pension schemes. However, she expressed concern over the country’s “unfair” gender gap in retirement saving.

Key statistics

88.1 - Australia’s high rating was for integrity within pensions

86.1 - Denmark’s high rating was for ongoing sustainability of pension provision

48th - UK placed low in the world for ongoing viability of provision.

3rd - UK rank globally for integrity and adequacy of provision

Adviser view

Shane Lenehan, adviser at Silvan Ridge Financial Services in Australia, said: “I believe the UK can learn from us and our encouragement for all people to contribute to their superannuated savings. This is on top of the mandated 9.25 per cent employer payment that must be paid into super. Under our system you can even use your super to borrow money and buy property, at any age.”