Money
Pensions
British pensions lag behind Europe
UK state pensions remain the worst in Europe for the second year in a row, writes Holly Thomas
The Government provides a basic state pension of £87.30 a week which is equivalent to 17 per cent of average earnings - way below the average of 57 per cent in the rest of the European Union, according to a report by Aon Consulting.
The UK also has one of the highest retirement ages in Europe at an average of 62, with 57 per cent of people aged 55-65 still working.
The value of the state pension for a single person is 30.8 per cent of the average wage in Britain. This compares with 51.2 per cent in France, 39.9 per cent in Germany and 32.5 per cent in Ireland.
Aon said the "inadequacy" of the system was "beyond question".
It also found that the UK state pension scheme is heavily reliant on funding from immigrants, as 50 per cent more foreigners move here than to other countries.
The report said there had been a gradual shift in the UK pension system away from the state and towards employers and individuals making their own provisions.
A spokesman said: "While this shift has previously been sustainable because the slack had been taken up by the private sector, this is no longer the case."
The report highlighted a lack of confidence in the pensions system among both employers and individuals, following a "spate of scandals, crises and changes to the legislation relating to pensions".
People are not saving enough privately, and the decline of generous, employer-based final-salary pensions has contributed to concerns about having to work longer.
The report said an improvement should be seen after the introduction of the Government's low-cost Personal Accounts in 2012.
Under this national pension savings scheme, workers who are not a member of an occupational pension scheme will be automatically opted in.
The scheme will see four per cent of employees' earnings diverted into their own pension fund, topped up by a further three per cent from their employer and one per cent in tax relief from the Government.
The Aon report found that Denmark had the best overall state pension scheme, followed by the Netherlands and Sweden.
Meanwhile a separate report from the Pensions Policy Institute and pensions provider B&CE shows that means-tested benefits remain a significant hurdle in Britain's growing pensions crisis - by discouraging more people to save.
In some cases every extra £1 a private pension fund generates results in a loss of benefits of around £1.
* Holly Thomas is Deputy Personal Finance Editor at the Daily Express and Sunday Express. Holly's views represent her own opinions and are for general information only. Always seek independent financial advice.
