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Britain Scores Well in Pension Study 

By Patrick Collinson, The Guardian

May 5, 2004

The new EU nations face a pensions catastrophe, but the British state pension is on a more secure footing than almost any other in Europe, according to a report published yesterday.

Slovakia scored worst and Luxembourg best in a study of the schemes of the 25 EU members by actuaries Aon. 

In Slovakia, there are only 1.6 people working for every one person retired, compared to Luxembourg, where the "dependency ratio" is 4.4. Britain came towards the top of the table, with 2.6 people working for every retired person. The EU average is 2.2. 

High unemployment rates and generous early retirement dates mean that pension systems are creaking in all of the ten new EU entrants. Hungary, where women can pick up a state pension at age 55, has only 3.6 million people working to support a retired population of 2.2 million. 

However in the new EU nations, relatively low state pensions means that the economic impact is softened. In France and Italy, state pension benefits are a far greater burden on the public purse. 

In France, 22.6 million workers are supporting generous pension benefits for 13 million pensioners in contrast to Britain, where 28 million active workers are paying for the much less generous state pensions of 10.9 million pensioners. "The UK has among the highest numbers of workers supporting each state pensioner, but while our position looks favourable, we cannot be complacent," said Paul McGlone of Aon. 

It will be 25 years before Britain is like Japan, where the ratio is two workers for every one pensioner. "The long-term solution has to be working longer, retiring later and having more children," Mr McGlone said.


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