Strain on the UK’s health system and a stalling life expectancy have undermined the country’s overall retirement security, according to research by Natixis Investment Managers.
The company’s latest Global Retirement Index, which assesses and scores national retirement systems, showed the UK having fallen one place to 15th out of 44 countries since last year’s research.
While the overall score of 72% remained the same as last year, this masked significant issues with the UK’s health system, Natixis found.
The Global Retirement Index is built on 18 separate indicators within four “sub-indices”: Finances in Retirement, Material Wellbeing, Health, and Quality of Life.
Within the Health score, Natixis found that the UK’s ranking dropped by 12 places relative to other countries in the index to 22 out of 44. This reflected falling life expectancy but also “longstanding pressures on the National Health Service and widening health inequalities”, Natixis said.
The World Bank’s dataset, used by Natixis to collate and compare countries in the index, shows the UK’s life expectancy at birth has stalled at 80-81 years since 2011. This compares to the global average, which has been improving steadily with the exception of the Covid-19 pandemic period of 2020-22.
Separate data from the Continuous Mortality Investigation (CMI) has shown that UK mortality has improved over the past two years. Life expectancy at 65 for men and women rose last year for the first time since the pandemic, and rose again this year. The CMI’s data is typically used to help price defined benefit pension scheme liabilities.
The UK’s Material Wellbeing score improved year-on-year, boosted by improvements to the index’s income equality measure, which reflects increases to the minimum wage and benefit payments, which have risen above the rate of inflation.
How the UK ranks globally
Norway led Natixis’s index, retaining the top spot from last year, with the Republic of Ireland in second, also for the second consecutive year.
The Netherlands, Switzerland, and Denmark make up the rest of the top five in the Global Retirement Index.
Natixis said the Global Retirement Index had highlighted the pressures facing many retirement systems, including changing working patterns, longer life expectancy, and more responsibility on individuals to fund their retirement.
These systems, the asset manager argued, were struggling due to being “built on 20th-century assumptions”.
“[This] model that has served individuals since the end of World War II is under growing strain,” Natixis said in its commentary.
“Ageing populations mean more people are drawing from public retirement systems while fewer workers are paying in. Longer life expectancies, and private pension liabilities, alongside record public debt, are putting pressure on public pensions, and inflation is leaving individuals with less money to save.”
“Divine intervention isn’t a practical strategy for today’s retirement funding problems, but policy intervention holds hope for real progress.”
Andrew Benton, head of northern Europe at Natixis Investment Managers, said the results demonstrated that it was vital for systems to “evolve and modernise”.
“Policy reform can help move people from retirement saving to retirement investing, improving the odds of retirement security,” he continued.
“While modernising policy can improve the chance of retirement security, individuals must also take ownership of their retirement journey, saving now and consistently. Every year of delay increases the pressure on the years that remain.”
David Goodsell, executive director of Natixis’ Centre for Investor Insight, added: “For many investors, the challenge is knowing how much they need to retire, and the long-term resilience of their savings, which may be impacted by health, economic, or environmental disruptions.
“Divine intervention isn’t a practical strategy for today’s retirement funding problems, but policy intervention holds hope for real progress.”
