UK state pension compared with other countries: below the OECD average, but it depends on income sources

Are British pensioners better or worse off than those in other countries? It depends on what exactly is being compared. Below are figures from a House of Commons Library briefing of 17 December 2024, based on the OECD report "Pensions at a Glance 2023".

The state pension alone looks weak

The UK spends a smaller share of GDP on state pensions and pensioner benefits than most advanced economies. If only the state pension is compared with average earnings, it is lower than in most such countries.

The net replacement rate from mandatory pension schemes for an average earner in the UK is 54.4%. The OECD average is 61.4%.

The gap narrows when all income is counted

The authors stress that British pensioners' position is closer to other countries when income from all sources is considered. In the UK, occupational and personal pensions play a large role, while in many other countries state support dominates.

According to OECD data for 2022, about 50% of British pensioners' income (excluding earnings) came from the state "first pillar". More than a third (39%) came from occupational pensions and 11% from personal savings. In 15 of 36 OECD countries, the state provides over 90% of pensioners' income.

Comparisons with Ireland, the Netherlands and Denmark

The authors point to Ireland, the Netherlands and Denmark as good comparators. These countries also pay flat-rate pensions that depend on the number of years of contributions or residence.

• The Irish contributory pension for a single person is similar to the UK new State Pension.
• The Dutch AOW pension for a person in a couple is slightly lower than in the UK, and higher for a single person.
• The Danish Folkespension is clearly higher once means-tested supplements are added. In 2022 the basic amount was DKK 6,928 a month, around £167 a week, and with supplements for a single person DKK 14,439 (about £360 a week).

The authors caution that such comparisons are difficult. Systems differ in structure, and even countries with flat-rate pensions have important structural differences.