Aon: UK Pension Working 'Well' but the Future Might Not be Bright
A news release about Aon Consulting’s 2005 European Pensions Barometer said that the study ranked the UK’s pension scheme sixth out of 15 pension programs – ahead of similar large industrial economies such as France, Germany and Italy.
At the same time, however, the inadequate UK state pension continues to worsen and pension legislation is stifling company pension provision, AON said.
Overall, on the good side, the percentage of older workers employed (55 – 64 years old) in the UK is among the highest in Europe. This is good news for the sustainability of the UK pension system as having higher levels of older workers means that such people are generating wealth and not drawing on their retirement savings until later in life, the AON researchers asserted.
The news release said that the Aon ranking in order was as follows:
- Portugal
- Ireland (tied)
- Netherlands (tied)
- Sweden
- Denmark
- United Kingdom
- Luxembourg
- Finland
- Spain
- Austria
- France (tied)
- Greece (tied)
- Germany
- Italy
- Belgium
The Aon measure looked at four key measures:
- Demographics – based on the net growth in population, the average retirement age and percentage of older workers employed (55 – 64 years old) in each country,
- Affordability and sustainability of state pension – this focuses on the projected public expenditure on state pensions by 2050 as a percentage of Gross Domestic Product (GDP), as well as the level of reserves set aside to bolster likely pension costs in 2050 as a percentage of GDP for each country,
- Adequacy of State Pension – takes into account the pension replacement rate, or proportion of pre-retirement income that the State provides in a particular country,
- Percentage of assets in company pensions – this is based on assets of company schemes as a percentage of GDP for that country.
For a copy of Aon Consulting’s European Pensions Barometer, call 0800 279 5588 or e-mail enquiries@aonconsulting.co.uk .