The United Kingdom’s retirement income system comprises a single tier state pension supported by an income-tested pension credit, and supplemented by voluntary occupational and personal pensions. Auto-enrolment will cover nearly all employers by 1 April 2017, requiring employers to enrol employees in pension schemes with minimum contributions (currently 2% but planned to increase to 8% by 2018) but employees can opt out.
The overall index value for the British system could be increased by:
- restoring the requirement to take part of retirement savings as an income stream
- raising the minimum pension for low-income pensioners
- further increasing the coverage of employees in occupational pension schemes
- increasing the level of contributions to occupational pension schemes
- raising the level of household saving
- accelerating the intended increases in the state pension age
The British index value fell from 65.0 in 2015 to 60.1 in 2016 primarily due to a reduction in the net replacement rate. However the ongoing introduction of the auto-enrolment process should improve the index value in future years with broadening coverage and an increase in the level of funded retirement benefits. For more information, please read the 2016 United Kingdom MMGPI press release.