The Netherlands has retained its position as having the best pension system in the world, according to the latest Mercer CFA Institute Global Pension Index. The report attributes this top ranking to the country’s robust asset base and sound regulatory framework. The index assessed the retirement income systems of 48 countries, representing 65% of the global population.
It examined over 50 indicators, including the level of benefits, system preparedness, and trustworthiness, grading countries from A to D. The Netherlands, which scored ‘A’, was joined by Iceland, Denmark, and Israel in the top category. Northern European countries generally fared well in the survey.
Finland and Norway received top grades, comparable to those of Australia and Singapore, reflecting their sound pension structures and beneficial features. Sweden, the UK, Switzerland, Belgium, Ireland, France, Germany, Portugal, and Croatia also received positive ratings, with significant improvements noted in Croatia. Conversely, some of the world’s worst pension systems were found in South Africa, Turkey, the Philippines, Argentina, and India.
The Netherlands remains unsurpassed in the level of benefits, while France and Uruguay follow behind.
U.S. pension system analyzed globally
In terms of sustainability, Iceland leads, supported by Denmark and Israel.
Finland ranks highest in trustworthiness, with Norway and Hong Kong SAR close behind. Among the lowest-ranking European countries, Poland performed poorly in the level of benefits, while Austria, Italy, and Spain faced challenges with the sustainability of their pension systems. Surprisingly, Turkey’s pension system, scoring 32.2 out of 100, is deemed more sustainable in the long term than those of these three European nations.
The index highlights significant risks for the future of pension systems, largely due to ageing populations, increased life expectancies, and declining fertility rates. These factors, combined with high government debt levels—88.7% of GDP in the eurozone—suggest that financing future public expenditures will be challenging. “The pension industry must improve upon many current arrangements,” said Dr.
David Knox, lead author of the report. The report outlines key recommendations to enhance financial security in retirement, including providing a “safety net” pension for all, facilitating access to cost-effective and well-managed retirement plans, supporting initiatives to increase contribution rates, offering long-term protection from future risks, encouraging flexible practices such as phased retirement and increased private savings, and raising the state pension age. By addressing these areas, the report suggests that retirees can achieve a more secure and stable income during their retirement years.
