UK lagging in state pensions league

BRITONS drawing the state pension are losing out compared with their counterparts in other countries, a report has found.

The state pension here relative to average earnings is the third lowest out of the 34 countries signed up to the Organisation for Economic Co-operation and Development, with pensioners in only Mexico and Chile getting a worse deal.

Those in the UK who rely solely on the state pension receive just 38 per cent of aver- age wages, compared with an average of 63 per cent across the 34 countries, which are described as developed or emerging nations.

Germans receive a state pension worth half of average earnings and the French get just over two thirds. The most generous systems were in Turkey and the Netherlands, providing 105 per cent and 96 per cent respectively.

Britons do not necessarily get smaller pensions per se, as average earnings here may be higher than other countries. But the figures mean UK OAPs relying on the state pension face one of the steepest drops in income once they retire.

However, when workplace or private pensions were taken into account, UK pensioners got around 67 per cent of earnings. Caroline Abrahams, of charity Age UK, said the OECD report sends a ‘clear message’ that Britons must save for retirement as the state pension alone may not be enough.

OLDER people will ‘struggle’ to keep working up to the new state pension age because many will not be healthy enough, an economics expert has warned.

Mark Pearson, a senior analyst at the Organisation for Economic Co-operation and Development ( OECD), claimed that raising the UK state pension age to 68 may ‘not be viable’ unless public health is improved.

The state pension age is gradually rising to reach 66 for both men and women by October 2020. It is planned to increase to 67 by 2028 and 68 by the mid-2030s.

Speaking at the publication of a pensions report, Mr Pearson said: ‘Frankly our population is not healthy enough to work that long. When you actually look at the health status of people between 60 and 70, you see a very rapid decline in the UK.

‘We are talking about a pension age of 68 and we almost certainly do not have the health to make that viable.

‘If we are serious about making people work to 68... then we have to do much better at tackling things like obesity, alcohol consumption, smoking. If we are going to make our pensions system work we have to make our health system work as well.’

The OECD’s Pensions at a Glance report showed that on average Britons retire before the current state pension ages of 65 for men and 62-and-a-half for women. Last year, the average retirement age for men was 64.1 while it was 62.4 for women – below the average for developed nations of 64.6 and 63.1.

Retirement ages across the 34 countries in the study have risen ‘ substantially’, so that 67 is becoming ‘the new 65’, the report said. But only the UK, Ireland and the Czech Republic have plans to extend the state pension age to 68 in the near future.

Experts on ageing have previously called for the rise in state pension age to be treated with caution. Professor Carol Jagger, of Newcastle University, warned that despite increased life expectancy, people spend relatively fewer of those ‘extra’ years in good health and raising the state pension age could be counterproductive.

Her research found that between 1991 and 2011 men gained four and a half years in life expectancy, while women gained three and a half.

But men spent two years longer living with poor physical health and women spent three years longer, as unhealthy lifestyles and rising obesity levels increased the number of people suffering from chronic illnesses.

Women were more likely to be carers for relatives, which also meant they were more likely to suffer poor health before the age of 65. Speaking at a conference in October, she said: ‘These are the people, particularly the women, who we are asking to work longer and a lot of them are also caring for an elderly parent and they may also be caring for grandchildren as well. So these are the issues that are going to affect employers and employees in terms of working longer.’

Pensions Minister Baroness Altmann said: ‘Age is no longer a reliable indicator of fitness for work. People are often at the peak of their careers in their 50s or 60s and aren’t ready to give up. That’s why this government is working hard to ensure people do not feel pressured into retiring before they want to.’

‘Caring for an elderly parent’