The Netherlands continues to hold its status as the nation with the finest pension system globally, as per the recent Mercer CFA Institute Global Pension Index. This prestigious ranking is credited to the nation’s strong asset foundation and effective regulatory policies. The index evaluated retirement income frameworks across 48 nations, which account for 65% of the world’s population.
It analyzed more than 50 criteria, including benefit levels, system readiness, and reliability, assigning grades from A to D. The Netherlands received an ‘A’ grade, sharing this honor with Iceland, Denmark, and Israel. Northern European countries generally achieved favorable results in this assessment.
Finland and Norway also received high ratings, comparable to Australia and Singapore, showcasing their robust pension frameworks and advantageous elements. Other nations such as Sweden, the UK, Switzerland, Belgium, Ireland, France, Germany, Portugal, and Croatia garnered positive evaluations, with Croatia showing notable progress. Conversely, some of the lowest-ranked pension systems were identified in South Africa, Turkey, the Philippines, Argentina, and India.
The Netherlands excels in benefit levels, maintaining a lead over France and Uruguay.
Global Analysis of the U.S. Pension System
Iceland is recognized for its sustainability in pension systems, followed closely by Denmark and Israel.
When it comes to trustworthiness, Finland ranks the highest, with Norway and Hong Kong SAR trailing closely. Among the lower-rated European nations, Poland was found lacking in benefit levels, while Austria, Italy, and Spain are struggling with their pension sustainability. Interestingly, Turkey’s pension system, with a score of 32.2 out of 100, is considered more sustainable in the long term compared to these three European countries.
The index underscores significant risks looming over the future pension systems, primarily due to aging demographics, rising life expectancy, and decreasing birth rates. These challenges, coupled with high public debt—88.7% of GDP within the eurozone—indicate that funding future public spending will be tough. “Many current pension arrangements need substantial improvements,” noted Dr.
David Knox, the report’s main author. The report delivers crucial suggestions aimed at boosting retirement financial security, which include establishing a ‘safety net’ pension accessible to everyone, promoting easier access to affordable and well-maintained retirement plans, endorsing higher contribution levels, providing long-term safeguards against future uncertainties, fostering flexible strategies like phased retirement and enhanced personal savings, and increasing the state pension age. By focusing on these aspects, the report indicates that retirees can obtain a more reliable and stable income during their retirement phase.
