Britain’s pension system slips to 14th in global rankings behind Chile and Kuwait

Britain scored 71.6 in the Global Pension Index produced by Marsh and the CFA Institute.

The country has continued to slide down the table after ranking 10th as recently as 2022.

The Netherlands retained first place with a score of 85.8, followed by Denmark and Iceland.

Chile rose to seventh with 79.2, while Kuwait ranked 13th with 72.9.

The UK’s weaker position was partly blamed on slower economic growth and its failure to improve as quickly as other countries.

However, the report praised the size of Britain’s private pension savings and the financial protections available to retirees on lower incomes.

Phil Parkinson, of Marsh People & Investments UK, said the country’s “continued slide” should cause concern.

He said other nations had introduced major reforms that allowed them to climb the rankings, while “the UK has effectively stood still”.

Mr Parkinson stressed that Britain’s pension system was not fundamentally broken and said the Government had already identified areas that needed reform.

However, he warned that action was now “necessary and urgent”.

He added: “These would bolster our position and improve our score overall and the sustainability of the system if we took them at pace.”

Marsh, a consultancy previously known as Mercer, has compiled the annual ranking for 18 years, assessing pension systems on resilience, retirement incomes and public confidence.

The report identified several measures that could lift Britain’s standing, including lowering household debt levels, requiring retirees to purchase annuities and broadening pension coverage to reach more of the workforce, particularly the self-employed.

Raising the minimum auto-enrolment contribution rates, currently set at five per cent for employees and three per cent for employers, would also help, the index found.

The Government has, however, ruled out any increase during this parliament. The matter will instead fall to the Pensions Commission, which is due to publish its findings in February next year.

Auto-enrolment contribution levels are widely regarded across the industry as insufficient. The state pension alone is expected to cover only around half of what a typical person needs in retirement.

Mark Futcher, of consultants Howden, said: “Everyone I speak to in the industry agrees that auto-enrolment doesn’t go far enough.

“The state pension is a benchmark, but that’s only going to be supplying half of what someone might need in retirement. That’s quite a shortfall.”

Pensions minister Torsten Bell acknowledged that the current system is leaving too many workers without adequate provision for later life.

“A good pension shouldn’t be a lottery based on which employer you happen to work for,” Mr Bell said.

“Right now, the system isn’t setting everyone up for a comfortable retirement, and private sector workers deserve better than that.

“Millions of people are grafting hard every day, but too many don’t have the certainty of a comfortable income to show for it when they retire.”