Britain's pension system could be improved by bringing more workers, including the self-employed, into private savings schemes which would improve "financial security in the UK",
The country's retirement system maintained its B rating in the latest Mercer CFA Institute global pension index, placing it alongside nations including Canada, New Zealand, France and Germany.
The assessment examined 52 retirement income systems worldwide. Top-tier A ratings went to the Netherlands, Iceland, Denmark, Singapore and Israel, while Sweden, Australia, Chile, Finland and Norway achieved B-plus grades.
Britain's index score rose marginally to 72.2 in 2025 from 71.6 the previous year, with updated economic growth figures driving the improvement. The annual study evaluates retirement systems based on benefit quality, sustainability and integrity levels.
Britain's pension system could be improved by encouraging more people to invest in workplace pensions
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This study identified several areas where Britain could enhance its retirement provision. Expanding private pension participation to encompass more workers, particularly those who are self-employed, emerged as a crucial recommendation.
The current automatic enrolment system requires a minimum eight per cent contribution rate, combining employer and employee payments plus tax relief. The report suggests raising these contribution thresholds would strengthen financial security for workers.
Additionally, the analysis proposed reinstating rules that would require retirees to convert some pension savings into regular income payments.
This would mark a reversal from the pension freedoms introduced previously, which allowed people complete flexibility over their retirement funds.
Childcare costs are among the contributing factors to the gender pension gap | GETTYLowering household debt levels was also highlighted as a factor that could improve Britain's pension system rating.
Tess Page, UK wealth strategy leader at Mercer, highlighted the opportunity presented by the Pensions Commission to implement meaningful reforms.
"If we increase the scope of employees covered by private pension schemes and increase the levels of auto-enrolment, we could improve outcomes for current and future generations of UK workers," she said.
Ms Page cautioned against Government intervention in investment decisions, stating that "mandating parts of the investment strategy, as contemplated under the Mansion House Accord, should not form part of the Government's roadmap".
She advocated for collaboration between Government and industry to create investment opportunities and foster a competitive business environment instead of imposing investment requirements.
Ministers have outlined their response to the pension system challenges through new legislation.
The Pension Schemes Bill aims to enhance returns for savers, with projections suggesting it could increase a typical worker's retirement fund by £29,000.
Meanwhile, the Pensions Commission will focus on removing obstacles that prevent many people from building adequate retirement savings.
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DWP minister Liz Kendall has launched a new Pensions Commission | PAMargaret Franklin, president and chief executive of CFA Institute, emphasised that retirement income security must remain the primary objective of pension systems, with fiduciary duty taking precedence over other considerations.
She said: “As some systems look to pension funds to drive investments that are considered in the national interest, the professional investment community must guard against the unintended consequences that may arise when mandates or restrictions distort the system.
“As the index makes clear, the central purpose of pensions must remain to secure retirement income, guided by fiduciary duty above all else.
"Pension systems work best when they balance innovation and national priorities with the enduring responsibility to serve end-investors’ interests.”