Aon Media Center

UK State Pension Scheme Among Best Placed in Expanded EU

LONDON, 5 May 2004 - While long term population changes look problematic, the UK currently has among the highest number of workers supporting each state pensioner, with as many as 2.6 people working for every retired person in the UK, according to latest Europe-wide research from Aon Consulting.

Entitled the Eurometer¹, Aon Consulting's latest research provides a snapshot of the current financial health of EU state pensions and ranks Luxembourg's at No. 1, with over four people (4.4) working and providing support for every retired Luxembourger. Slovakia is at the bottom end of the scale with a staggering dependency ratio of 63% (i.e. 1.6 people working for every retired Slovakian person). A summary of the table is outlined below:


RATIO-working: retired


RATIO-working: retired

1. Luxembourg

4.44 : 1

11. Czech Republic

2.19 : 1

2. Ireland

3.89 : 1

12. Spain

2.07 : 1

3. Netherlands

3.68 : 1


2.05 : 1

4. Denmark

3.32 : 1

14. Estonia

1.85 : 1

5. Portugal

2.83 : 1

15. Greece/Slovenia

1.82 : 1

6. Sweden/Finland

2.69 : 1

16. Italy/Poland

1.78 : 1

7. Austria

2.61 : 1

17. Malta/Latvia

1.73 : 1

8. UK

2.57 : 1

18. France

1.73 : 1

9. Germany

2.51 : 1

19. Hungary

1.66 : 1

10. Cyprus

2.40 : 1

20. Slovakia

1.59 : 1

NOTE: A 'pay as you go' state pension system is a characteristic of all 25 EU countries.

None of the 25 state pension schemes researched has built up reserves. Instead pension costs are allocated or levied on the active working population within each country.

This system works well when the ratio between active people and pensioners remains constant. However with reference to the UK, the birth rate has declined by nearly 20% in the last 30 years². Additionally, Government projections show the estimated ratio of people of working age to people of pension age will fall by 20% over the next 25 years and by over 30% over the next 50 years. This will translate to a fall in the working to retiree ratio of 2.05 workers to every one retiree by 2029 and 1.8 workers to every one pensioner by 2059³.

The retirement age and the unemployment rate also impact on the sustainability of any state pension system. Both sets of figures vary from country to country. Retirement age varies from the age of 55 to that of 65. For instance in Hungary, women already qualify for a state pension as early as 55, whereas in the UK the female retirement age is due to rise to 65 in line with male retirement age - from 2010.

Unemployment rates range from 2% in Luxemburg and 4.8%4 in the UK to a crippling 25% in Poland. Higher unemployment gives rise to a smaller employed labour force pool to pay for the pension charges.

Paul McGlone, Principal and Actuary at Aon Consulting said: "While the UK position looks favourable relative to many of our neighbours, we cannot be complacent. Changes in the profile of the population are almost certain over the next generation due to a combination of increasing life expectancy and low birth rates."

"UK citizens are increasingly aware that they have a responsibility to plan for their own retirement. The pension paid by the government may only serve as a basic provision, and over time state pension provision will place greater strains on public finances. If the UK public want to have sufficient funds to live on in old age, they need to save now - whether in a pension scheme or elsewhere - to provide that security. Both government and employers have a vital role to play in encouraging the UK public to save for retirement."

Note to Editors:
  1. The Eurometer is bespoke research from Aon Consulting, which allows comparisons of pension provision to be made across all 25 EU countries. The research is developed on a tri-annual basis. The Eurometer is 'state of the nation' research, which reveals emerging trends in the field of employment and employee benefits and allows comparisons between different EU countries.
  2. This is a decline of 19.85% from 14.1 per 1,000 in 1971-1975 to 11.3 per 1,000 in 2002. Source: Population Trends, no. 115, spring 2004,
  3. Table 1.1 on page 37, www.statistics.gov.uk/downloads/theme_population/PT115.pdf These figures are based on the Government Actuary's Department 2002 population projections. These figures take into account the differences between working population and those actually employed as well as he differences between pension age and those who have actually retired.
  4. Source: Labour Market Assessment, 17 March 2004, www.statistics.gov.uk/downloads/theme_labour/Assessment_Mar04.pdf
About Aon Consulting

Aon Consulting is a leading human capital consultancy, helping organisations of every size to attract and keep the employees they need. We advise on all aspects of employment, including health-related insurance and risk; employee compensation and pensions; human resource strategy planning; job design and change management; and staff assessment and legal issues.


Aon Consulting is a division of Aon, the UK's largest insurance broker and provider of risk management services, a major force in reinsurance and the UK human capital consulting market.


Aon Consulting Limited is authorised and regulated by the Financial Services Authority.


This press release may contain certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results, depending on a variety of factors. Potential factors that could impact results include the general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, exchange rates, rating agency actions, pension funding, changes in commercial property and casualty markets and commercial premium rates, the competitive environment, the actual cost of resolution of contingent liabilities and other loss contingencies, the ultimate impact of the business transformation plan, and the timing and resolution of related insurance and reinsurance issues relating to the events of September 11, 2001.

Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, are contained in the Company's filings with the Securities and Exchange Commission.


Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only.

If you elect to comment or engage with our content via third-party social media websites, you authorize Aon to have access to certain social media profile information. Please click here to learn more about information that may be collected when using these tools on Aon.com

email Email   print Print   rss