Currently, the UK State Pension is roughly £12,548 a year before tax. That’s a useful safety net, but can it fully fund retirement? Let’s see how it compares to other countries.
Where the UK stands globally
Each year, the Mercer CFA Institute Global Pension Index ranks systems on adequacy, sustainability and integrity.
In 2025, the UK came 12th with a score of 72.2 – solid, but not world‑beating — while The Netherlands takes the top position, thanks to generous benefits and strong regulation.
- Netherlands (1st): 85.4
- Singapore (4th): 80.8
- Australia (7th): 77.6
- United Kingdom (12th): 72.2
- United States (30th): 61.1
Among the G7 countries, our State Pension is often considered the least generous. UK retirees get only about 22% of average earnings from the state, the lowest in the group.
The upside is that our system scores better on long‑term sustainability because it leans more heavily on workplace and private pensions rather than pushing most of the cost onto the state.
Still, to supplement a State Pension, many people build private savings by investing in the stock market. How does that work?
Retirement investment accounts
For British investors, two popular options are a Stocks and Shares ISA and the Self-Invested Personal Pension (SIPP). Both allow investments in shares, funds and other assets, but they serve slightly different purposes.
With an ISA, money can be withdrawn at any time, and any gains or dividends are tax-free. A SIPP, on the other hand, is designed specifically for retirement. Contributions receive tax relief, but funds are usually locked away until at least age 55 (rising to 57).
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
In short, ISAs are more flexible, while SIPPs offer upfront tax advantages.
So how can an investor aim for the best outcome?
Building a retirement portfolio
Whether in a SIPP or ISA, stock selection is critcal. A balanced portfolio should include some defensive and income stocks to help reduce volatility.
But steady growth stocks are key to building wealth. One example is Coca-Cola Europacific Partners (LSE: CCEP). As a major distributor of softdrinks across large parts of Europe and beyond, it enjoys steady demand and revenue.
The shares are up 91.8% in five years (equivalent to 13.9% annualised), and it has 39 years of uninterrupted dividend payments. The current yield’s only 2.8% but is well covered by earnings.
Price-wise, it looks cheap, with a price-to-earnings growth (PEG) ratio of only 0.45. Profitability looks good too, with a return on equity (ROE) of 24.42%.
So to recap:
- Steady earnings resulting in high profitability.
- A fair-to-low price with growth potential.
- Moderate income appeal.
Of course, no investment is risk-free. Consumer demand for soft drinks can fluctuate, and currency movements can affect international earnings. More recently, sugar and health regulations post additional risks.
But overall, consistent demand backed by years of solid performance is why it’s the type of stock worth considering for a retirement portfolio.
The bottom line
Building a decent retirement pot through an ISA or SIPP takes time, patience and regular contributions. Early on, growth matters most, so many people tilt towards quality companies with room to expand. Later, reliable dividends can help turn that pot into a steady income.
By spreading investments across sectors, blending defensive and growth shares, and making regular monthly contributions, the State Pension becomes a helpful safety net – rather than your only lifeline.
