How good is the prospect of retirement security in the UK?
The UK has slipped by four places to 22nd in a global survey looking at the countries with the best – and worst – retirement security, according to a recent Professional Pensions article. Switzerland was named the top performer in the Natixis Global Asset Management CoreData Global Retirement Index (GRI), followed by Norway, Australia and Iceland.
Although the UK has experienced a decent rate of economic growth and improved employment data, above-average government debt and negative real interest rates pushed it down the rankings. Placed below Slovenia and Qatar, the UK performed slightly better than Israel, Malta and Kuwait. Britain scored well in terms of health (79%) and quality of life (82%), but we ranked poorly on finances in retirement (53%), which included the ability to preserve the value of savings and material wellbeing (69%). Its total score of 70% was 12 percentage points below Switzerland and also meant it was behind the US, France and Japan.
Natixis’ Head of UK Retail, Chris Jackson, explained uncertainty surrounding the new pension freedoms had had an impact on the country’s score, saying:
“Despite its relative economic strength, the index shows that the UK still has a way to go to stabilise its finances and safeguard the retirement security for its people. As the nation reckons with a growing ageing population and changes to how people can access their pensions, individuals will need to make critical decisions about their own retirement finances going forward.”
Jackson also said the more successful countries in terms of material well-being and finances in retirement were those with bold public policies such as compulsory or semi-compulsory retirement savings programmes, adding:
“The UK is currently in the process of implementing exactly this kind of programme, and as the uptake of auto-enrolment continues we expect it to contribute to an overall improvement in the UK’s ranking.”
Quality of retirement was measured across four thematic indices – good health and access to quality health services; sufficient material means to live a comfortable life; access to quality financial services, and living in a clean and safe environment.
The bottom performers in the index – which looked at a total of 150 nations – were Togo (18%), the Central African Republic (23%), and the Democratic Republic of Congo (23%).