UK drops in world rankings for sustainable pension systems
The UK has been knocked out of the world's top 10 pension systems, after Chile climbed up the table five places from 14th last year.
The UK system now places 11th, with a score of 7.2 out of 10, in Allianz Global Investors' Pension Sustainability Index published 6 October.
The score is calculated through individual assessments of a country's demographics, public finances and pension system. It also considers factors such as pension payments as a proportion of gross domestic product and the legal or effective retirement age.
The UK scored 7.4 for demographics, 6.4 for public finances and 7.5 for the pension system.
The lower ranking came as questions continue to be asked about the sustainability of the triple-lock protection for the state pension. A recent PP survey found most participants believe the triple-lock should be altered or scrapped entirely.
However, Allianz added it was not "all doom and gloom" for the UK pension system, arguing developments in the private pension sector would boost it by reducing reliance on public pension provision.
Head of UK solutions Iain Cowell said measures such as auto-enrolment (AE) would improve the UK's sustainability in the long term.
"Although the UK has slipped out of the top ten in our latest study, it's not all doom and gloom," he said. "The UK has come to terms with the retirement challenges that lie ahead.
"The first steps towards a more holistic and empowering agenda have been taken and today we see the last few members entering into AE. These simple yet sophisticated steps have enlarged the share of people saving for their retirement and enriched a new generation."
Australia, Denmark and Sweden topped the list of the 54 countries assessed, due to focused efforts on encouraging their populations to save. Slovenia, China and Thailand held the bottom spots.
Peru, Argentina, the Philippines and Colombia were included for the first time this year, and took 19th, 22nd, 23rd and 38th respectively.
The largest movers, with jumps of five places or more, were Chile, France, Japan, Malaysia and Mexico. In contrast, Croatia, Ireland, Italy, Russia and Switzerland had all fallen more than five places.
Aegon head of pensions Kate Smith also warned sustainability may drop if scheme contributions are not increased.
She said: "Sustainability for the state isn't the same as retirement income adequacy for individuals. Few countries do well at both these measures. The UK is still in the top 12 for both, which may surprise some.
"The adequacy figures will be distorted by many people approaching retirement who will be lucky enough to still receive generous defined benefit pensions making up a dominant part of their retirement income. But this trend is beginning to taper off sharply.
"AE is still embryonic, and contributions aren't nearly high enough to build adequate retirement incomes, so the future might not be so rosy for future retirees unless they take the plunge and increase the amount they save."
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