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British pensions only sixth in Europe
On a scale of 1 (best) to 25 (worst) where would you place British pensions? The surprising answer from business consultants Aon is sixth
At least it is when the 25 measured are the countries of the European Union – not counting new entrants Bulgaria and Romania. Aon assessed both state and company pensions in each country in the light of pension age and life expectancy.
The UK’s overall position is due mainly to the company and personal pensions which many people have. Aon looked at two measures – how adequate pensions are and how affordable they are. Our state pension was – you've guessed it! – 25 out of 25 for adequacy but third for affordability. In other words it was so cheap there was no problem finding the money for it.
Our company pensions were the fifth best in the EU – beaten by Netherlands, Denmark, Sweden, and Ireland. Those four joined us in the top seven with newcomers Latvia at fourth and Estonia second. Their high places were due not so much to the generosity of their pensions as to the short life expectancy in those countries. Locals can expect to draw their pension for well under 10 years which makes affording them much easier. In the UK we can look forward to 16 years on a pension. In France, Luxembourg and Austria it is more than 20 years.
That is one reason why France, with a generous state pension and the longest life expectancy in the union, came near the bottom of the overall rankings at 22. Aon considers France's generous public pensions and its early retirement age to be unsustainable in the long term. Belgium was bottom. Only a third of those aged 55 to 64 are employed and company pension provision is low.
Top of the table was Denmark. It has an "acceptable" state pension, a high proportion of older people in work, and 95% of employees are paying into a company pension scheme, the highest in Europe. To Aon, that is a good balance. But it warns that "all EU countries face significant pension challenges" because of increased life expectancy. Governments need to raise the retirement age and encourage more people to save for their retirement.
This article was created: 1 March 2007.
This article was last edited: 21 March 2007.
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