‘Mediocre’ system to blame for Brits’ bleak retirement outlook

The UK’s financial infrastructure and retirement prospects was given one of the worst evaluations among developed economies in an 81-page report, The 2014 Global Retirement Index, published by Coredata Research and Natixis Global Asset Management.

The UK scored just 58 per cent in one of the sub-indices used for the research, the Finances in Retirement Index. Only Japan, Italy and the Netherlands had worse ratings, scoring 47 per cent, 53 per cent and 56 per cent, respectively.

Researchers looked at the “soundness of a country’s financial system”, as well as the likely returns on investments and the long-term purchasing power of savings, when compiling the Finances in Retirement Index.

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Britain fared better in the overall Global Retirement Index, rising two places from 20th in 2013 to 18th today with a score of 74 per cent. It leapfrogged the US, which stayed in 19th place for the second year running with a score of 73 per cent.

Switzerland and Norway both topped the leaderboard with a score of 84 per cent, followed by Austria (81 per cent) and Sweden (79 per cent).

The report stated: “High tax pressures and increasing inflation have affected retirees’ current income and purchasing power, while increasing pressure on the UK pension system.”

Colin Bell, product director of European unit-linked guarantees at Aegon UK, said: “These figures paint a stark picture for those in their 40s and 50s, working hard to make ends meet and put as much as they can away for their twilight years.

“Those who are not turning to their children are often deferring their retirement instead, because they simply do not have enough saved up to fund their retirement.”

Adviser view

Paul Coffin, chartered wealth manager at London-based Capital Financial Markets, said: “We should have more policies to incentivise people to save. That means protecting and communicating the tax benefits on pensions.”