Mercer and CFA Institute have released the
15th annual Mercer CFA Institute Global Pension Index (MCGPI). The Netherlands’
retirement income system has regained the top spot on the list, with Iceland and
Denmark taking second and third places respectively. How does your country
rank? Canada has a B, Australia has a B+ and the United States has a C+
The Netherlands had the highest overall index
value (85.0), closely followed by Iceland (83.5) and Denmark (81.3). Argentina
had the lowest index value (42.3). Although the Netherlands is currently undertaking
significant pension reform, the system is well-positioned to provide excellent
benefits amid the move from a collective benefit structure to a more individual-defined contribution approach.
The Index uses the weighted average of the
sub-indices of adequacy, sustainability, and integrity. For each sub-index, the
systems with the highest values were Portugal for adequacy (86.7), Iceland for
sustainability (83.8), and Finland for integrity (90.9). The systems with the
lowest values across the sub-indices were South Korea for adequacy (39.0),
Austria for sustainability (22.6), and the Philippines for integrity (25.7).
Falling birth rates have placed pressure on
several economies and pension systems over the longer term, negatively
affecting the sustainability scores for countries like Italy and Spain. Several
Asian systems, however, including mainland China, Korea, Singapore, and Japan,
have undertaken reform to improve their scores in the last five years.
I have included only those countries with a grade of C or better.
2023 Mercer CFA Institute Global Pension Index
MCGPI benchmark table for retirement income systems
around the world. This year's table compares 47 retirement income systems across
the globe and covers 64 percent of the world’s population. The Netherlands’
retirement income system has regained the top spot on the list, with Iceland
and Denmark taking second and third places respectively.
|
System |
Overall Grade |
Total |
Adequacy |
Sustainability |
Integrity |
|
Netherlands |
A |
85.0 |
85.6 |
82.4 |
87.7 |
|
Iceland |
A |
83.5 |
85.5 |
83.8 |
80.0 |
|
Denmark |
A |
81.3 |
82.5 |
82.5 |
77.8 |
|
Israel |
A |
80.8 |
77.0 |
82.7 |
84.4 |
|
Australia |
B+ |
77.3 |
70.7 |
78.4 |
86.1 |
|
Finland |
B+ |
76.6 |
77.4 |
65.6 |
90.9 |
|
Singapore |
B+ |
76.3 |
79.8 |
71.6 |
77.0 |
|
Norway |
B |
74.4 |
79.4 |
59.1 |
87.8 |
|
Sweden |
B |
74.0 |
72.1 |
75.6 |
75.0 |
|
UK |
B |
73.0 |
77.3 |
62.7 |
80.6 |
|
Switzerland |
B |
72.0 |
69.6 |
70.6 |
77.9 |
|
Canada |
B |
70.2 |
71.1 |
64.5 |
76.7 |
|
Ireland |
B |
70.2 |
77.1 |
54.4 |
81.1 |
|
Chile |
B |
69.9 |
60.0 |
71.3 |
84.0 |
|
Uruguay |
B |
68.9 |
84.0 |
46.2 |
76.5 |
|
Belgium |
B |
68.6 |
82.0 |
39.4 |
88.2 |
|
New Zealand |
B |
68.3 |
65.6 |
64.3 |
78.3 |
|
Portugal |
B |
67.4 |
86.7 |
32.0 |
85.9 |
|
Germany |
B |
66.8 |
79.8 |
45.3 |
76.3 |
|
Kazakhstan |
C+ |
64.9 |
46.9 |
74.8 |
80.0 |
|
Hong Kong SAR |
C+ |
64.0 |
51.9 |
61.1 |
87.6 |
|
USA |
C+ |
63.0 |
66.7 |
61.1 |
59.5 |
|
UAE |
C+ |
62.5 |
72.2 |
45.4 |
70.8 |
|
Colombia |
C+ |
61.9 |
62.9 |
55.4 |
69.3 |
|
France |
C+ |
61.7 |
84.5 |
40.9 |
54.4 |
|
Spain |
C+ |
61.6 |
79.7 |
28.5 |
79.2 |
|
Croatia |
C+ |
60.3 |
57.1 |
56.0 |
71.4 |
|
Saudi Arabia |
C |
59.5 |
61.5 |
54.9 |
62.9 |
|
Poland |
C |
57.6 |
59.8 |
45.4 |
71.2 |
|
Japan |
C |
56.3 |
59.2 |
46.5 |
65.6 |
|
Italy |
C |
56.3 |
72.7 |
23.7 |
75.9 |
|
Malaysia |
C |
56.0 |
44.3 |
56.1 |
74.6 |
|
Brazil |
C |
55.7 |
70.4 |
28.5 |
70.1 |
|
Peru |
C |
55.5 |
55.0 |
50.4 |
63.5 |
|
China |
C |
55.3 |
64.2 |
39.0 |
63.7 |
|
Mexico |
C |
55.1 |
63.5 |
58.4 |
37.0 |
|
Botswana |
C |
54.5 |
39.8 |
52.8 |
80.6 |
|
South Africa |
C |
54.0 |
44.2 |
49.1 |
76.6 |
|
Taiwan |
C |
53.6 |
47.6 |
52.9 |
64.1 |
|
Austria |
C |
52.5 |
66.8 |
22.6 |
71.6 |
|
Indonesia |
C |
51.8 |
41.6 |
50.6 |
69.8 |
|
Korea |
C |
51.2 |
39.0 |
52.7 |
68.5 |
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