UK basic state pension trails wealthy countries, OECD analysis shows

State pension spending is set to top £150bn a year

A BBC News analysis published on 24 October 2026, citing OECD work, found that the UK’s basic state pension provides a lower replacement rate than the average across wealthy countries. The OECD’s measure considers people born at the start of the millennium in different countries, compares benefits with average wages and assumes the pension system as it existed in 2022 is in place. With the basic pension and automatic occupational enrolment included, after-tax UK retirement benefits equal 54.2% of average UK earnings, compared with 63.2% across wealthy countries.

The replacement rate measures how generous a typical pension is relative to workers’ average earnings. Occupational and personal pensions are more prevalent in the UK, and income from them narrows the international gap. The BBC analysis found that people relying only on the state pension are a fair bit worse off than many retired people elsewhere.

The UK’s triple-lock formula, introduced in 2011, raises the state pension by the greatest of 2.5%, earnings growth or inflation. The BBC analysis said benefits have risen far faster than workers’ earnings since the formula took effect. Housing costs have also been rising fast, and pensioner poverty has increased slightly in the last decade.

Even after taking housing costs into consideration, pensioners are less likely than families with children or working-age people to be in relative poverty, defined as having less than 60% of the income of a typical household. BBC News reported that funding the triple lock has already cost the state billions more than initially envisaged, with that cost set to rise further. The outlet said a continuing debate over whether the policy is sustainable or fair had raged for a while.

A separate BBC report published 15 September said the state pension was likely to top £13,000 a year. The main analysis said spending on the state pension is set to top £150bn a year, making it the single most expensive benefit to fund.

Other OECD figures cited by the BBC show that the UK spends a smaller share of its economy on total retirement benefits than the average wealthy country. The BBC analysis said this reflects political choices, including the UK’s dedication of larger amounts to items such as universal healthcare.

With ageing populations, the OECD reckons the amount needed for pensions may be set to soar in many nations by 2060. The exceptions are largely countries that are deploying changes. The OECD’s predictions for the UK were likely to point to a smaller rise under the revised triple-lock system Burnham plans than under the current system, but the change may still mean more borrowing. As it is, £1 in every £13 the UK government spends pays interest on existing debt. Countries with more generous pensions, such as Italy, have faced pressure to reform.

A BBC report published 29 September said Burnham vowed to end the existing triple lock in 2030 to help fund care. The planned system would raise the state pension by at least inflation or 2.5% and remove the automatic annual link with average earnings. It would likely mean less generous increases, although it would keep track with earnings growth over the longer term.

The UK’s workplace system requires workers to be automatically enrolled in occupational schemes. The BBC analysis said that, with auto-enrolment into workplace pensions, “the UK appears to be ahead of the game in insisting on universal privately funded pensions for workers.” Automatic enrolment narrows the international gap for people with access to occupational and personal pensions, while reliance on private pensions contributes to the UK’s gender pension gap.

The gender pension gap is the difference between the average pension income of men and women aged 65 and over, expressed as a percentage of men’s average pension income. The OECD found that the typical gap in most wealthy countries is around 22.8% in favour of men. UK women typically receive a pension one-third less than a man receives, mainly because of reliance on private pensions, though the most recent OECD data for the UK are from 2021.

The OECD analysis linked the UK’s wider gap to women’s employment histories. Women are more likely to have received lower pay over the course of their working lives, taken career breaks or worked part time, and the effect on pension savings can be stark.

Taken together, the measures show different outcomes: the modelled basic replacement rate sits below the wealthy-country benchmark, while automatic enrolment narrows the gap for people with occupational and personal pensions. It does not erase the disadvantage for people who depend on the state pension alone.

The BBC analysis acknowledged that British pensioners, and those yet to retire, may feel others have it better elsewhere. It said the message was “not to dwell on outrage but to take action.” The state pension has become more generous over the years, while people who want a retirement comparable to that in other countries were advised to save if they can and have not left it too late.