Map shows how UK pensions compare to rest of Europe after Autumn Budget

The UK trails behind much of Europe when it comes to the generosity of our pensions, compared to the salaries pensioners made while they were working.

Statistics from 2022 show Brits make an average of 54.4% of what they earned as a worker once they start withdrawing their pension.

By contrast, pensioners in Portugal make close to 100% of their previous earnings, according to research from the OECD – and the EU average is 68.1%.

The figures come after Chancellor Rachel Reeves outlined the first Labour Budget for 14 years yesterday, containing a mammoth £40 billion of extra taxes.

She confirmed that due to the triple lock, the state pension will be rising by 4.1% in the next financial year.

That means more than 12 million pensioners will receive up to £470 per year extra.

Previously, the government has pointed towards this increase as sufficient to cover the costs lost by most pensioners following the controversial cuts to the Winter Fuel Allowance.

Also in yesterday’s Budget was an announcement that unused pension funds will be included within a person’s estate for Inheritance Tax purposes, as the Treasury seeks to boost its revenues from that source.

The OECD’s statistics show that the UK pension ‘replacement rate’ – meaning the percentage of an average working salary that a person can expect to receive as a pension – is roughly similar to that of Norway and Germany.

People from Turkey, the Netherlands and Greece could expect to receive 90% or more of their previous earnings when they take out their pension.

Among the lowest rates in Europe (excluding voluntary pension schemes) were Lithuania, Estonia and Ireland.

Currently, British pensioners receive either the Old State Pension or the New State Pension depending on whether they reached the age to begin withdrawing it before or after April 6 2016.

The Old State Pension is a two-tier system with a flat rate of £169.50, topped up with an additional earnings-related payment, while the New State Pension consists of a single-tier flat-rate allowance worth up to £221.40 per person per week.

Both figures increase by whichever is highest out of either 2.5%, inflation, or earnings growth each year, through the ‘triple lock’ system.

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