What is the state pension amount in the UK?
To start, let's look at the UK state pension scheme. The UK state pension is funded from National Insurance Contributions (NICs) which workers and employers pay.
You’ll usually need at least 10 qualifying years on your National Insurance record to get any State Pension, but to get the full new State Pension of £164.35 per week, you’ll need 35 qualifying years. Until 2010, women received their pensions at the age of 60 and men at 65, but this has now been equalised so that it is 65 for both men and women.
State pension ages for men and women will rise in tandem from now on, increasing to 66 by October 2020 and 67 by 2028.
According to a report from the Organisation for Economic Co-operation and Development (OECD) pensioners in the United Kingdom receive around a third (29%) of a working wage when they retire, compared to the OECD average of 63%.
Deferring your UK pension
If you’ve got several years to go before retirement, think about ways you might be able to boost your retirement savings. For example, you do not have to draw your UK state pension immediately, and if you’re able to delay taking it then you will receive more once you do start claiming it.
Your UK state pension increases by the equivalent of 1% for every nine weeks you defer, so if you defer to a year, this works out at just under 5.8%. If you’re entitled to the full state pension of £164.35 a week, and defer it for a year, you’ll get an extra £493 a year.
EU pensions compared to the UK
State pension in France
The French enjoy the longest retirement in the developed world, and can start claiming pension at the age of just 62. However, retirees must have worked for 42 years before they can claim a full state pension. To receive any form of French pension you must have worked in France for at least 10 years.
French state pensions are funded by employer and employee social security contributions. At retirement, a maximum of 50% of average annual earnings can be drawn from the state pension, up to a limit of €39,732 per year. Workers must also by law pay into supplementary pensions.
State pension in Germany
State pensions in Germany are funded by a system of compulsory pension insurance, with premiums deducted automatically from workers’ pay by their employers, who also contribute.
There is no statutory minimum or maximum pension, but a 2017 report from the Hans Böckler Foundation’s Institute for Economic and Social Sciences found that men on average get €1,154 per month (or €13,848 per year) versus just €634 (€7,608 per year) for women.
In Germany you can claim your state pension once retired, which is at 65, but this is gradually rising to 67 by 2029. Average wage workers can expect to receive 50% of their working wage when they retire.
Non-EU pensions compared to the UK
State pension in the US
The US state pension is only available to citizens of the USA and is mainly financed through social security taxes paid by employees and employers. OECD data shows that pensioners in the US receive 49% of a working wage when they retire.
In the USA, as in the UK, the state retirement age, known as the full retirement age, is increasing, beginning with people born in 1938 or later. People born after 1959, for example won’t reach full retirement age until they are 67. You may start receiving benefits as early as 62 or as late as 70 in the US, but people who start them before they reach retirement age will get smaller monthly benefits.
The exact amount pensioners in the USA receive depends on which state they live in, the age at which you retire and the level of workplace pensions and other savings and investments you have. However, as of May 2019, the average monthly state pension benefit for retired workers was US$1,412 (equivalent to £1,068).
State pension in Australia
Australia’s equivalent of the state pension, which is financed by tax revenues, is means tested, which means a claimant’s income can reduce the amount they receive. Australian workers typically receive around 43% of their salary on average.
The maximum basic rate pension for a single person in Australia is AUS $834.40 (equivalent to £451.60) per fortnight, or AUS$629 (£340.43) if you’re part of a couple.
You can start claiming your state pension at the age of 65 and six months, but this age is increasing by six months every two years until 2023.
As well as the state pension, under what’s known as the “superannuation guarantee” employers must make contributions of 9.5% of their workers’ gross earnings into a retirement account.