Britain languishes near bottom of state pensions league, says OECD

Britain's state pension is one of the least generous in the developed world, the Organisation for Economic Co-operation and Development (OECD) said yesterday.

Britain's state pension is one of the least generous in the developed world, the Organisation for Economic Co-operation and Development (OECD) said yesterday.

The organisation said just four countries - Mexico, Korea, New Zealand and Ireland - offered less valuable state pensions than the UK.

Its comparison of 30 OECD countries showed Britain ranked 26th on the value of its state pensions - a Briton on average pay of £22,000 could expect a typical pension of just 48 per cent of their earnings after tax in the year before retirement. By contrast, Luxembourg, the most generous country in the survey, offers a typical state pension worth almost 110 per cent of post-tax earnings. The average state pension on offer across the OECD is worth 69 per cent.

The OECD warned poor-value state pensions could lead to increased pensioner poverty unless governments took action. John Martin, the director of the OECD's employment, labour and social affairs directorate, said: "Demographers have been warning us for some time that ageing is looming and that when it strikes populations and workforces will rapidly age. But many governments preferred to ignore the call for reform and cling to the hope of postponing solutions beyond the next election or claiming that rather painless remedies could be found."

Joe Harris, the general secretary of the National Pensioners Convention, a pressure group, called for a significant increase in the value of state pensions. Yesterday, the group complained that none of the major political parties had come up with positive proposals for reform, even though its research suggested 45 per cent of election candidates supported a big increase in the value of the basic state pension.

Mr Harris said: "With about 4 million pensioners still living below the official poverty line, a bigger state pension would make a huge difference - particularly for many older women who are among the poorest pensioners in the country."

The Government said it targeted spending at pensioners most in need. A spokeswoman for the Department for Work and Pensions, said: "Around 85 per cent of pensioners have additional income on top of the state pension. Comparisons of income are not always meaningful because the cost of living varies considerably between countries - we have free healthcare, for example."