No real improvement in UK retirement system - Mercer

Little improvement has been made in strengthening the adequacy of the UK retirement system, meaning that employers may have to play a bigger role in helping to close the retirement savings gap.

Mercer, which has ranked the UK in 14th position in its latest annual Melbourne Mercer Global Pension Index, has said that the UK needs to improve by raising the minimum pension for low-income, increasing contributions to workplace pension schemes and enabling better coverage for the self-employed.

The consultant has given the UK a C+ mark, after scoring it highly for its integrity, which prompted Mercer UK head of wealth, Benoit Hudon, to say that the country’s retirement system needs to see its adequacy score improve dramatically.

“A lack of understanding of what they will receive and of what they will actually need in retirement has led to a gap in retirement savings for many employees,” he said.

“This begs the question as to whether employers should play a greater role, both in educating and supporting their workforce.

“Taking a more active role in securing employees’ retirement could support engagement and productivity, and help attracting top talent,” added Hudon.

The UK received a score of 60.0 for adequacy, 55.3 for sustainability and 84.0 for integrity.

The Netherlands and Denmark have retained first and second place respectively on the index, with both being given an A grade.

The Netherlands had the highest index value (81.0), and has consistently held first or second position for ten out of the past 11 index reports. Thailand had the lowest index value at 39.4.

For each sub-index, the highest scores were Ireland for adequacy (81.5), Denmark for sustainability (82.0) and Finland for integrity (92.3). The lowest scores were Thailand for adequacy (35.8), Italy for sustainability (19.0) and the Philippines for integrity (34.7).

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