The UK has failed to maintain its position in the premier league of countries with the most sustainable pension regimes, after being replaced by Chile.
The latest Pension Sustainability index, complied by Allianz Global Investors, revealed the UK had slipped from the top 10 list, having only joined in 2014.
According to the study, a substantial number of countries have improved the sustainability of their pension systems over the last two years, but Allianz reassured that it is not all doom and gloom for the UK, despite the nation dropping to 11th place.
Iain Cowell, head of UK solutions at Allianz Global Investors, said: “The UK has come to terms with the retirement challenges that lie ahead.
“The first steps towards a more holistic and empowering agenda have been taken and today we see the last few members entering into auto-enrolment.”
He said these steps have enlarged the share of UK citizens saving for retirement.
Australia, Denmark, Sweden, the Netherlands, Norway and New Zealand topped the list, which Allianz reported was due to the countries directly engaging with their populations to encourage people to save.
Mr Cowell said the UK is currently on this journey, helping people understand their options.
The study, which analyses demographic developments, public finances and the design of the pension system, found that Croatia, Ireland, Italy, Russia and Switzerland had experienced steep declines in sustainability.
The fastest climbing countries were Chile, France, Japan, Malaysia and Mexico, all of which jumped more than five places in a year.
Brigitte Miksa, head of international pensions at Allianz Asset Management, said the pension reforms which have been introduced in many countries over the past 10 years are now starting to bear fruit.
However, she pointed out that the study does not assess the adequacy of state pensions, and said the reforms have come at a price.
“Reforms of the past decade have improved the sustainability of the pension systems at the price of reducing the level and the security of benefits,” Ms Miksa said, adding this shows how “delicate” it is to reform pension systems.
“You have to safeguard the financial wellness of one generation – who has worked and contributed to the existing system – and at the same time do everything to not endanger the financial prospects of future generations.”