Pensions: international comparisons
A look at how UK pensions compare with those in other countries. The note compares the UK state pension with similar systems in Europe and goes on to look more broadly at the structural differences in the sources of pensioner income across economically advanced countries.
This note looks at how UK pensions compare with those in other countries. It includes a comparison of the UK State Pension with similar systems in Europe and goes on to look more broadly at the structural differences in the sources of pensioner income across economically advanced countries.
The task of comparing pension provision in the UK with that of other countries is complicated by substantial differences in the structure of pension systems across the developed world.
The UK devotes a smaller percentage of its GDP to state pensions and pensioner benefits than most other advanced economies.
A comparison of state pension alone shows the UK providing a lower level of pension than most other advanced economies relative to average earnings. The UK has an overall net replacement rate of 54.4% from mandatory pensions for an average earner, below the OECD average of 61.4%.
Source: OECD: Pensions At A Glance 2023, Table 4.2 and 4.5
However, the relative position of pensioners converges if income from all sources is considered. Income from occupational and personal pensions is a relatively important source of pensioner income in the UK, in contrast to many other countries where state provision (financed either through social insurance contributions or general taxation) is dominant.
OECD estimated that 14.5% of people aged 66 and over in the UK were living in relative income poverty in 2022. This was the 14th highest rate among 34 OECD countries for which data was available for 2019-2022.