A new report shows that the UK state pension is the least generous of any developed country. How does the UK state pension compare with state pensions from other countries?
How generous is the UK state pension?
In the UK, the amount of state pension you’ll get depends on how many years you’ve paid National Insurance (NI) for and when you reached state pension age. There are currently two state pension systems: one for people who reached state pension age before April 6th 2016 and one for those who reached state pension age on or after that date.
The weekly state pension amount for tax year 2018 – 19 is:
- Basic state pension: £125.95. This is the most you’ll get if you have 30 years’ National Insurance and aren’t entitled to a state second pension, such as a SERPS pension. You receive this if you reached state pension age on or before April 5th 2016.
- New state pension: £164.35. This is the maximum you’ll get if you have 35 years’ National Insurance and you haven’t been contracted out at all during that time. You receive this if you reached state pension age from 6th April 2016.
SAVVY TIP: You could get more or less than this if you’ve built up a state pension through your employment, if you were contracted out of National Insurance during part of your working life (for the new state pension) or if you don’t have the full number of years of National Insurance.
How does the UK state pension compare to other countries?
A study by the OECD (Organisation for Economic Co-operation and Development) looked at state and private pensions in the 35 countries that make up the organisation. It compared how much people can expect to receive from the state pension, or the state pension combined with any other pension that they have to join. It found:
- Someone starting work today could expect a pension of 63% of the average wage. This could be a combination of state pension and other pension that they have no option but to join.
- Someone starting work today could expect a state pension of 29% of the average wage. This compares to 102% in Turkey and 100% in Denmark, Israel and the Netherlands.
When can you get your state pension?
In the UK, the state pension age for women is currently rising to 65 and will rise to 66 for women and men by October 2020. It is due to rise to 67 between 2026 and 2028. There are plans to bring forward the rise in state pension age to 68 as well.
Millions of women born in the 1950s experienced a sharp rise in their state pension age between 2010 and 2020, from 60 to 66.
The report by the OECD says that in the future, the pension age will vary from 59 (in Turkey for women only) to 60 years in Luxembourg and Slovenia and 74 in Denmark.
- Denmark will increase the pension age to 68 by 2030.
- The Netherlands will increase the pension age to 67 and three months by 2022.
- Canada isn’t going ahead with a planned increase in pension age to 67.
- The Czech Republic won’t increase the pension age beyond 65.
- Poland reversed a planned rise in the pension age to 67 and will drop the pension age to 60 for women and 65 for men.
- France and Greece will have a pension age below 65.
SAVVY TIP: On average, the pension age will increase across OECD countries in the future by 1.5 years for men and 2.1 years for women. This will bring the average pension age to 66 by 2060. Quite a contrast to our own state pension age of 66 by 2020.
You can read the full report (all 167 pages of it!) on the OECD website.
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