Press release: UK pensions falling behind European neighbours

Pensioner incomes least generous compared to average wages

The SNP has said "Scotland needs the full powers of independence to protect and boost the incomes of pensioners" - as new research shows UK pensions are the least generous of every country in North West Europe in comparison to the average wage.

New analysis from the House of Commons Library [See Notes] shows that UK state pensions are the lowest as a proportion of pre-retirement wages of all of our European neighbours. UK pensioners receive around a quarter (28%) of the average working wage when they retire. In stark contrast, pensioners in Luxembourg and Austria receive 90% of the average working wage.

The net replacement rate measures how effectively a pension system provides a retirement income to replace earnings. It divides pension entitlement by pre-retirement earnings, taking into account personal income taxes and social security contributions paid by workers and pensioners. It includes state pensions and mandatory employment pensions - all statutory enforced pensions.

The analysis, using OECD data, shows the UK net replacement rate is lower than all thirteen neighbouring European countries, including Ireland (36%), Switzerland (44%), Norway (52%), Germany (52%), Sweden (53%), Finland (64%), Belgium (66%), Iceland (70%), Denmark (71%), France (74%), Netherlands (80%), Austria (90%) and Luxembourg (90%).

The figures also show that pensioners in independent countries of Scotland's size or smaller receive a much higher proportion of the average working wage (64%) than UK pensioners (28%) and more than the average of countries in north west Europe (62%).

The findings follow the publication of the UK government's Households Below Average Income (HBAI) statistics in March, which revealed UK pensioner poverty levels have risen to a 15 year high - with 2.1million UK pensioners (18%) now living in poverty after housing costs, an increase of 200,000 on 2018/19.

Commenting, SNP Shadow Work and Pensions spokesperson David Linden MP said:

"After a decade of Tory austerity cuts, millions of older people are now living in poverty and the UK has one of the worst state pensions in the developed world.

"Independence is the only way to keep Scotland safe from Tory cuts, and Scotland needs the full powers of independence to protect and boost the incomes of pensioners.

"Boris Johnson should be ashamed that UK pensioner poverty has risen to a 15 year high on his watch but instead he's cut Pension Credit, axed the free TV licence, and is slashing Universal Credit for millions of families across the UK.

"Scotland can do better as an independent country. The evidence shows that pensioners in independent countries of Scotland's size or smaller receive more generous state pensions than pensioners in the UK, both in absolute terms and as a proportion of the average wage.

"Scotland is increasingly vulnerable under Westminster control. It is essential that people in Scotland have a choice over our future so we can build a strong, fair and equal recovery and more prosperous society as an independent country."