In April 2020, the state pension rose in line with earnings growth by 3%. This was the largest rise since 2012.
This increase means those still on the basic state pension will be receiving £134.25 a week, up by £5.05 from £129.20 a week. Those on the new state pension will receive £175.20 per week, up by £6.60 from £168.60.
The UK retirement age is also the highest and increasing to 68 this year, 6 years above the average age of 62 across the EU.
Unfortunately, the state pension in the UK continues to fall behind all other developed countries, according to data from the Organisation for Economic Co-operation and Development (OECD).
The UK government pays 29% of average earnings, the lowest of all 24 countries in the OECD.
This falls well below the average of 62.9% across these countries.
Mexico joined the UK at the bottom of the list, with a slightly higher state pension of 29.6%.
In contrast, the Netherlands has the most generous state pension, paying 100.6% of earnings on average.
The top 5 state pensions among OECD countries were:
- Netherlands (100.6%)
- Portugal (94.9%)
- Italy (93.2%)
- Austria (91.8%)
- Spain (81.8%).
In response to the report, former pensions minister Ros Altmann warned that the state pension system is “unaffordable”, despite being lower than other OECD countries.
Writing on her blog, Baroness Altmann said:
“We are one of the world’s leading economies, but our support for the oldest in society is not fit for purpose.
To avoid burdening younger generations with significant tax rises, it is vital that more is done to boost private pension saving.”
Steve Webb, the Pensions Minister, said that the OECD report highlights how “vital” it is that the UK has a “sustainable” pension system.
“That is why we have to raise the state pension age, provide a simpler, fairer state pension which provides a foundation for further saving, and extend working lives,” said Mr Webb.
We can help with your pension planning.