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The best pensions in the world: how 30 countries rank

How 30 countries stack up when it comes to pension systems, according to the annual Melbourne Mercer Global Pension Index.

The annual Melbourne Mercer Global Pension Index ranks the pension system in 30 countries. 

To do this it gives each a score between 0 and 100 in three areas: adequacy, sustainability and integrity. 

Adequacy covers tax support, savings and benefits. This was given 40% weighting to the final score. 

Sustainability covers coverage, contributions and economic growth. This was given 35% weighting to the final score. 

Integrity covers tax regulation, costs and protection. This was given 25% weighting to the final score. 

Read on to see which country topped the list in 2017, and how each one scored on the key areas. 

The annual Melbourne Mercer Global Pension Index ranks the pension system in 30 countries. 

To do this it gives each a score between 0 and 100 in three areas: adequacy, sustainability and integrity. 

Adequacy covers tax support, savings and benefits. This was given 40% weighting to the final score. 

Sustainability covers coverage, contributions and economic growth. This was given 35% weighting to the final score. 

Integrity covers tax regulation, costs and protection. This was given 25% weighting to the final score. 

Read on to see which country topped the list in 2017, and how each one scored on the key areas. 

1. Denmark

Total score: 78.9

Adequacy: 76.5

Sustainability: 79.8

Integrity: 81.3

How it could be improved:

  • Introduce arrangements to protect pension interests of both parties in a divorce.

 

2. The Netherlands

Total score: 78.8

Adequacy: 78

Sustainability: 73.5

Integrity: 87.5

How it could be improved:

  • Introduce a minimum access age so that it is clear benefits are preserved for retirement purposes.
  • Provide greater protection to members when their employer becomes insolvent, or in cases of fraud and mismanagement.

3. Australia

Total score: 77.1

Adequacy: 75.3

Sustainability: 73 

Integrity: 85.7 

How it could be improved: 

  • Increase saving from older people in line with life expectancy rises.
  • Introduce a mechanism to raise state pension age in line with life expectancy.
  • Introduce a requirement that part of the retirement pot be taken as an income stream.

4. Norway

Total score: 74.7

Adequacy: 77

Sustainability: 61

Integrity: 90.3

How it could be improved:

  • Increase levels of mandatory contributions
  • Introduce arrangements to protect all parties in the event of a divorce

5. Finland

Total score: 72.3

Adequacy: 70.2

Sustainability: 61.3

Integrity: 91 

How it could be improved:

  • Introduce arrangements to protect pension interests of both parties in a divorce.
  • Continue to raise levels of mandatory contributions that must be set aside for the future.

 

6. Sweden

Total score: 72

Adequacy: 67.7

Sustainability: 71

Integrity: 80.3

How it could be improved:

  • Redesign salary sacrifice arrangements to appeal to more employees
  • Reintroduce tax incentives for individual contributions

7. Singapore

Total score: 69.4

Adequacy: 65.2

Sustainability: 66.2

Integrity: 80.7

How it could be improved:

  • Reduce barriers to setting up group corporate retirement plans.
  • Open up the central provident fund, on which the rest of the system is based, to non-residents, who make up more than a third of the workforce.

8. Switzerland

Total score: 67.6

Adequacy: 60.2

Sustainability: 64.7

Integrity: 83.3

How it could be improved:

  • Reverse preferential treatment of lump sum payments in favour of regular pension payments.
  • Increase the rate of home ownership.
  • Introduce further limits on accessing funds before retirement.

9. New Zealand

Total score: 67.4

Adequacy: 66.2

Sustainability: 61.5

Integrity: 77.8

How it could be improved:

  • Increase savings into voluntary workplace pension scheme KiwiSaver
  • Increase focus on income streams in the place of lump sums

10. Chile

Total score: 67.3

Adequacy: 58

Sustainability: 69.1

Integrity: 79.7 

How it could be improved:

  • Raise the level of mandatory contributions.
  • Increase retirement age for both men and women.
  • Raise the level of household savings.

 

 

 

11. Canada

Total score: 66.8

Adequacy: 69.9

Sustainability: 55.4

Integrity: 77.7 

How it could be improved:

  • Introduce an attractive product for savers without an employer-sponsored scheme.
  • Increase level of household savings for middle income earners.
  • Increase savings from older workers as life expectancy rises.

12. Ireland

Total score: 65.8

Adequacy: 77.9

Sustainability: 43.9

Integrity: 77.2

How it could be improved:

  • Introduce a minimum level of contributions.
  • Provider greater protection to members' benefits when their employer becomes insolvent.
  • Reduce government debt as a percentage of GDP.

 

13. Germany

Total score: 63.5

Adequacy: 76.5

Sustainability: 40.9

Integrity: 74

How it could be improved:

  • Increase minimum pension for low-income pensioners
  • Improve level of communication from pension arrangments to members
  • Increase the number of people covered by occupational pensions

 

14. Colombia

Total score: 61.7

Adequacy: 66.4

Sustainability: 49.9

Integrity: 70.7 

How it could be improved:

  • Increase minimum level of support for poorest.
  • Raise level of household saving.
  • Raise state pension age.

15. United Kingdom

Total score: 61.4

Adequacy: 58.2

Sustainability: 49.4

Integrity: 83.5

How it could be improved:

  • Restore requirement to take part of retirement savings as income stream (reverse pension freedoms).
  • Raise minimum pension for low income pensioners.
  • Raise level of household savings.

16. France

Total score: 59.6

Adequacy: 80.4

Sustainability: 38.6

Integrity: 55.8

How it could be improved:

  • Increase level of funded contributions.
  • Improve regulatory requirements for private pensions.
  • Increase state pension age.

17. USA

Total score: 57.8

Adequacy: 57

Sustainability: 57.1

Integrity: 60.1

How it could be improved:

  • Provide incentives to delay retirement.
  • Provide access to retirement plans on an institutional basis for workers who don't have access to an employer-sponsored plan.
  • Raise mandatory contributions to boost savings on median income earners.

18. Malaysia

Total score: 57.7

Adequacy: 42.3

Sustainability: 61.2

Integrity: 77.6

How it could be improved:

  • Raise household savings levels.
  • Encourage older workers to save.

19. Poland

Total score: 55.1

Adequacy: 58.1

Sustainability: 43.1

Integrity: 67.1

How it could be improved:

  • Introduce requirement that part of retirement benefits be taken as income stream.
  • Raise level of funded contributions.
  • Raise levels of household savings.

20. Brazil

Total score: 54.8

Adequacy: 67.8

Sustainability: 29.2

Integrity: 70 

How it could be improved:

  • Introduce arrangments to protect pension interests of both parties in a divorce.
  • Enable people to retire gradually while receiving a part of their pension.
  • Introduce a minimum acccess age so that retirement benefits from private pensions are used for retirement purposes only.

21. Austria

Total score: 53.1

Adequacy: 67.6

Sustainability: 19.9

Integrity: 76.4 

How it could be improved:

  • Introduce a minimum access age so that retirement benefits from private pensions are used for retirement purposes only.
  • Raise the level of household savings.
  • Use tax effective regulation or collective bargaining agreements to increase employees' coverage in occupational schemes.

22. Italy

Total score: 50.8

Adequacy: 66.2

Sustainability: 16.4

Integrity: 74.3

How it could be improved:

  • Restrict the availability of retirement benefits before retirement.
  • Reduce government debt as a percentage of GDP.

23. Indonesia

Total score: 49.9

Adequacy: 40.1

Sustainability: 49.3

Integrity: 66.4

How it could be improved:

  • Introduce a minimum level of support for poorest individuals
  • Improve communication between pension schemes and their members
  • Raise pension age in line with life expectancy

 

24. South Africa

Total score: 48.9

Adequacy: 34

Sustainability: 45.7

Integrity: 77.1

How it could be improved:

  • Increase level of preservation of benefits when members withdraw from occupational funds.
  • Increase support for poorest pensioners.
  • Introduce minimum level of mandatory contributions.

25. South Korea

Total score: 47.1

Adequacy: 46.9

Sustainability: 46.8

Integrity: 47.9

How it could be improved:

  • Improve level of support for poorest pensioners.
  • Increase level of funded contributions.
  • Improve governance requirement for private pension system, including the need for an audit.

26. China

Total score: 46.5

Adequacy: 54.2

Sustainability: 38.2

Integrity: 46

How it could be improved:

  • Offer more investment options to members to permit a greater exposure to growth assets.
  • Improve levels of communication between pension plans and members.
  • Increase state pension age over time.

27. Mexico

Total score: 45.1

Adequacy: 38.5

Sustainability: 55.9

Integrity: 40.5

How it could be improved:

  • Raise level of funded contributions.
  • Improve regulatory requirements for the private pension system.
  • Introduce a requirement that part of retirement benefits must be taken as an income stream.

28. India

Total score: 44.9

Adequacy: 39.5

Sustainability: 43.8

Integrity: 55.1

How it could be improved:

  • Introduce minimum level of support for poorest people.
  • Increase coverage of pensions for the working class.
  • Improve regulatory requirements for private pension providers.

29. Japan

Total score: 43.5

Adequacy: 48

Sustainability: 26

Integrity: 60.7

How it could be improved:

  • Raise level of household saving.
  • Introduce requirement that part of retirement benefit must be taken as an income stream.
  • Raise state pension age in line with life expectancy.

30. Argentina

Total score: 38.8

Adequacy: 42.4

Sustainability: 33.1

Integrity: 41.2 

How it could be improved:

  • Raise the minimum available for the poorest pensioners.
  • Introduce a minimum contribution for saving.
  • Introduce tax incentives to encourage saving.

Read the full report here.

 

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