The Organisation for Economic Cooperation and Development (OECD) claims British workplace pensions are, frankly, awful.

Money invested via UK pension companies consistently fell between 2001 and 2010 in contrast to pension pots in countries like Chile and Poland.

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Poland, Chile lead

A big component of the problem is investment performance. It sounds glaringly obvious. But it's about how UK (and US companies) tend to invest in stocks and shares rather than in safer government bonds, as is often the case on continental Europe or elsewhere.

Long term, historically-speaking, shares have consistently out-performed bonds. But in the last 10 years the combination of a tech-boom meltdown in 2001, a crushing banking crisis in 2007/2008 and a consequent economic recession have all rocked values and ultimately, UK pension returns.

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In the red

"In 2008," says the OECD, "pension funds across the OECD suffered a negative 10.5% real rate of return. Although real rates of return were positive in 2009 and 2010 (at 6.0% and 1.4% respectively), they turned negative again in the first half of 2011 (–1.4%).

It added: "As a result, most countries' pension funds were still in the red in terms of investment performance over the period 2007-11, with an average real net return of minus 1.6% annually across the OECD."

The Brown effect

In contrast, the OECD claims other countries like Chile, Poland and Norway have seen the size of workforce pension pots increase (see the table below). But there are other forces at work too. Gordon Brown's decision to tax UK dividends did huge damage, especially to final-salary schemes in the private sector.

Then there's the chunky City annual fees, trail fees and management charges which the UK financial industry feed on every year, indirectly damaging UK growth and consumer spending power.

So it's official: the OECD acknowledges that UK pension performance is close to joining Spain and the US, both at the bottom of the heap.

Source: OECD