UK pension index falls to 14th place

UK pension system sustainability faces scrutiny after a new report reveals a decline in the nation’s standing among global retirement income systems. The latest Marsh CFA Institute Global Pension Index shows the United Kingdom falling from 12th to 14th place out of 55 countries, with its overall score dropping from 72.2 to 71.6. The country retained a B grade, though its sustainability score fell from 63.2 to 62.4, receiving a C+ grade. Adequacy scores also dipped from 75.9 to 75.6, while integrity scores dropped from 79.0 to 78.0.

Government Reforms and Global Standing

Marsh noted that legislation such as the Pension Schemes Act 2026 and the creation of the Pensions Commission could improve retirement outcomes. However, researchers argue these changes are insufficient to solve long-term structural issues. Comparisons with international peers highlight the need for higher retirement savings and wider auto-enrolment coverage to bolster both adequacy and sustainability. Globally, the sustainability measure remained the weakest category, driven by ageing populations and longer life expectancies.

Christine Mahoney, global defined benefit and defined contribution leader at Marsh, stated that pension systems are under strain. She emphasized that governments must clarify objectives, strengthen funding, and build flexibility into retirement design. The consultancy suggests that “guided retirement” could help savers manage funds throughout later life, potentially improving security. Additionally, potential changes to the triple lock, alongside fiscal incentives for long-term investment in productive assets, might support sustainability goals.

Minister Torsten Bell defended the government’s planned changes to the triple lock at the Pensions UK Annual Conference. He argued that reform is necessary to preserve the state pension without further increasing the retirement age. Bell framed the changes as a way to rebuild trust and ensure sustainability does not rely solely on age adjustments. The report identifies seven potential reforms to strengthen systems globally, including extending coverage to non-standard workers, reducing early withdrawals, and strengthening governance.

While the Netherlands leads the index with a score of 85.8, Australia joined the A-grade group for the first time, bringing the number of top-rated systems to six. Iceland and Denmark followed in the rankings.