For those who are being paid the state pension, this may not come as too much of a shock to be fair, although given the relative wealth our country has, to see the likes of Portugal and Spain – which effectively went bust during the financial crisis – and Korea way ahead of us in terms of the generosity of state pension payments really puts things in perspective.
UK workers will get an average of 38 per cent of the national average wage in state pension according to the OECD’s figures, a relative pittance when you consider that in Austria you would get 91.6 per cent, and in Turkey you would get 104.8 per cent – meaning you are actually better off retired in Turkey than you are in work. A rare win for getting older.
UK workers will get an average of 38 per cent of the national average wage in state pension
The OECD’s Pensions At A Glance 2015 research – not exactly aptly named in my opinion, given it runs to a hefty 378 pages in total – has some pretty interesting facts.
For example, the average number of years of contributions needed across the OECD countries before getting full minimum benefits was 26 years.
The UK state pension, by comparison, requires individuals to pay in for 35 years from next April before getting full minimum benefits, nine years more than the average across the world.
It is understandable that the way the state pension is paid is changing, particularly as the world population is generally getting older.
It is expected that the proportion of individuals aged 65 or above will rise from 8 per cent of the total world population now, to around 18 per cent by 2050, according to the report.
Taking the OECD countries alone, the figures are more concerning, with a rise from 16 per cent aged 65 or over now, to 27 per cent in 2050. So it is little wonder the state pension is becoming harder to fund, and that is a feature around the world, not just in the UK.
This has led to a number of changes designed to increase the financial sustainability of state pensions across the OECD.
Increasing the minimum retirement age has been a key means of achieving this, with the UK pension age set to rise to 68 between 2044 and 2046, but before that the men’s and women’s state pension age will level out at 65 in 2018.