IS the UK STATE PENSION the Worst in Europe?

⏰
0:00 - Introduction
0:41 - 'UK State Pension worst in the developed world' FT
0:46- OECD chart on future replacement of an average wage
3:32 - UK Government options?
4:04 - Mercer CFA Inst Global Pension Index 2021
4:39 - Recommendations from both reports
5:04 - Personal Pensions have changed so much!
6:22 - How does the UK State Pension work?
6:52 - Is the UK State Pension a Ponzi Scheme?
7:34 - National Insurance Fund Account to 31st March 20208
8:49 - Demographics...

I really wanted just to highlight the piece of research that this all stems from and that to be fair there is some truth to it. Also towards the end of the video we'll take a look at the National Insurance Fund Account showing the National Insurance contributions in and the expenses out, it makes for interesting reading.

First of all this came about because of a report by the OECD, Pensions at a glance, this was then also picked up by the FT going one step further to say that the UK State Pension is the 'worst in the developed world'!

It all stems from the calculation of the percentage of an average salary that is replaced at retirement. 100% would mean someone retiring would receive 100% of the average salary from retirement.

Lets say the average is £35,000 then 100% replacement in retirement would be the full £35,000, if it was 50% then it would be approximately £17,000. We have Turkey, Italy, Luxembourg and Austria, all comfortably on the right, in the mid table we have Finland, Israel, Sweden. We keep going and going all the way along towards the left and and boom, there is the UK.

The UK at the furthest point on the graph with just under a 30% replacement value. Which broadly sounds accurate if we consider that the UK State Pension is currently just under £10k (£9,339 for 2021-22). Then the assumed average salary would be approx. £30k. Admittedly this is only part of the story but clearly on this basis alone it’s a stark contrast and a clear indication that the UK State Pension is an insufficient replacement of a individual’s salary and fairly shocking when viewed in this manner versus those other countries. Just to be clear the other indication here is the voluntary element which tops up the income to just over 60% replacement value, as in personal pensions and workplace pensions. So the combination of both personal pensions and state pensions.


📘References:

Mercer Global Pension Index 2021
https://www.uk.mercer.com/our-thinkin...

OECD Pensions at a Glance 2019
https://www.oecd.org/publications/oec...

National Insurance Fund Accounts 2019-20
https://www.gov.uk/government/publica...

Article by John Prescott for the Mirror Newspaper (7th Jan 2015)
https://www.mirror.co.uk/news/uk-news...

YouTube tools I use:
📊 YouTube Analytics - https://www.tubebuddy.com/EBailey
✏️ Thumbnail Design - https://www.canva.com/join/ttk-lhj-zhn

🗒 Please note:

Legal Disclaimer - Some links found in the description box may be affiliate links, meaning I will make a commission at no extra cost to you. I only recommend products that I like and use.

The information provided is based on the current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on my understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances.

This channel is for information and education purposes only. Any information or guidance given does not act as financial advice. Please consult a financial adviser if you are unsure in anyway.

Keep in mind that the value of your investments can go down as well as up, so you could get back less than you invest.


⭐ My aim is to provide education and guidance to help individuals understand pensions, investments and protection.

#ukstatepension #financialplanning #worstineurope