UK pension system 'falls short' as Finland tops global pension rankings

Finland's pension system has ranked number one in the world in 2021 while the UK has fallen “short of the mark”, ranking 25th out of 33 countries included in analysis by Blacktower Financial Management.

The analysis used key metrics to analyse pension systems around the world, including public spending, average retirement ages, average pension contributions and the percentage of the population who have participated in pension schemes.

Finland was deemed to have the best pension system in the world, recording high public expenditure on pensions and a high percentage (89.8 per cent) of the population paying into a pension.

Poland was just behind Finland, achieving high public spending on pensions of 11.2 per cent of GDP, one of the lowest retirement ages at 65, and one of the highest contribution rates (27.5 per cent).

Ranking third was Sweden, thanks to an “impressive 100 per cent” rate of participation in funded pensions amongst its working population, and a low retirement age of 65.

The UK, however, ranked 25th overall, recording a public expenditure on pensions of 7.7 per cent of GDP, the 14th lowest of the countries ranked, and the joint fifth oldest retirement age at 68.

In addition to this, less than half (49 per cent) of the UK's working population participated in the funded pensions, with pension contributions equal to 20.44 per cent of the average wage.

The country with the lowest participation was Greece, with just 1.3 per cent of the working population participating in pension funds, while Portugal recorded participation around 2.5 per cent and Spain around 3.3 per cent.

Overall, the average age that people retired was 66 years, with Slovenia, Greece, Israel and Turkey all recording the lowest average age of 62, whilst Denmark had the highest at 74.

Some countries were also found to have “significantly higher” contribution rates, with Italy earmarking 33 per cent of the average wage for pension contributions, compared to 6.27 per cent for Mexico.

Commenting on the findings, Blacktower Financial Management group managing director, Gavin Pluck, stated: “Our research reveals the world’s best countries for pension systems, this research is something to seriously considered when deciding which country to go live and work overseas.

“Inevitably, this will impact your future pension, meaning you may have to work for longer to fund your comfortable retirement depending on which country you live in.”

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