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The UK has slipped out of the top 10 in a global annual report which ranks pension systems.
It was ranked 11th in the Mercer CFA Institute Global Pension Index 2024, which benchmarked 48 countries around the world.
Last year the UK was in 10th place, and in 2022 and 2021 it was placed at number nine.
The report gave the UK a “B” grade, alongside other countries including France, Germany, Switzerland, Ireland, Canada and Sweden.
Ireland was placed 18th on the list.
The report described countries in the B category as having “a system that has a sound structure, with many good features but has some areas for improvement that differentiate it from an A-grade system”.
Those behind the report said that overall, scores have seen a slight decrease. Part of this is because of the impact of rising living costs, as well as people living for longer, meaning their pots have further to stretch.
The Netherlands’ retirement income system retained the top spot on the list, with Iceland and Denmark remaining in second and third places respectively. All three countries were graded A in the report.
The pensions system in the Netherlands features strong regulations and offers participants guidance regarding their pensions, researchers said.
Benoit Hudon, Mercer’s UK president and chief executive, said: “Like most countries, the UK is facing a challenge to ensure people have saved enough for an adequate retirement.
“The UK’s pension sector has fallen outside of the top 10 in the global rankings, illustrating the need for reforms. The Government should expand auto-enrolment, address the fragmented pension system, and support productive asset investment.”
Retirement systems around the world are increasingly moving away from defined benefit (DB) plans and shifting to defined contribution (DC) arrangements, the report said.
DB pensions promise people a certain level of income in retirement, while DC schemes put the risks of the eventual size of a retirement pot onto the individual saver.
David Knox, lead author of the report and a senior partner at Mercer, said: “There is no single solution to getting retirement systems onto more solid ground.
“Now is the time for governments, policymakers, the pension industry and employers to work together to ensure that older populations are treated with dignity and can maintain a lifestyle similar to what they experienced through their working years.”
Earlier in October, the UK Government launched a six-week consultation into expanding a new type of pension called collective defined contribution (CDC) schemes.
With CDC schemes, employer and employee contributions are pooled into a single fund, spreading out risk and potentially providing a more predictable pension income, based on collective investment performance.
The consultation applies to England, Scotland and Wales. Occupational pensions are a devolved matter for Northern Ireland and the UK Government has said it is anticipated that Northern Ireland will make corresponding legislation.
The UK Government plans to introduce legislation in 2025.
A Department for Work and Pensions spokesperson said: “The UK is the highest ranked G7 country in this study, being eight places above France and 19 places above the USA, but there is much to do to provide people with the security they deserve in retirement.
“Restoring our economic stability will grow the economy and drive up living standards for people across the country. Through our landmark pensions review, we are exploring options to expand on the success of automatic enrolment while boosting investment and increasing pension pots.
“More than 15 million pension savers could benefit from our new Pension Schemes Bill, with the potential for an average earner to have £11,000 more in their defined contribution pot by retirement when saving over a career.”