Financial experts have come up with a pension premier league that shows today’s young savers are unlikely to have such a comfortable retirement as their parents.
The research looks at pensions in three ways- how the schemes work, how much current pensions pay and whether pension firms can sustain current benefit levels for future generations.
The main conclusion from the Melbourne Mercer Global Pension Index was today’s pensioners do not have too bad a deal, but their children and grandchildren are likely to fare worse.
Three of the top six are Scandinavian nations, while Australia, Netherlands and Switzerland take the remaining top places.
“Denmark scores well because the pension system has well-funded, pays good benefits and has a high level of assets,” said a Mercer spokesman.
Common retirement problems
“However, the research shows that no one pension fits all can apply to every country, but does show that some common features can be integrated into each system that add improvements.”
The 25 countries looked at in the survey account for 60% of the world’s population.
“We believe many countries face common retirement problems and will do so for years to come. People are living longer, which is having a massive social and economic effect in many nations,” said the spokesman.
“How retirement is looked at in each country is a result of that country’s own history, but averaging the scores seems to show many countries are reforming their pension systems in a positive way.
“The average score for the 14 countries surveyed in the first report in 2010 was 61.7. The average this time for the same 14 countries is 64.3.”
Pensions under pressure
Only top-marked Denmark has an A rating from the Melbourne Mercer Global Index.
The full list is detailed in the table below. The ratings mean:
- A – An excellent pension system paying good benefits and is sustainable
- B – Pensions with good features but room for improvement
- C – A reasonable system with risks that need addressing and a lack of sustainability
- D – Pensions with major weaknesses that affect sustainability
- E – A poor system or one in early development
“Pensions are under pressure, especially in the west, due to stagnant economies, too much government borrowing and aging populations,” said the spokesman.
| The Global Pension League | ||||
|---|---|---|---|---|
| Ranking | Country | Index value | Sustainability rank | Rating |
| 1 | Denmark | 82.40 | A | A |
| 2 | Australia | 79.90 | B | B+ |
| 3 | Netherlands | 79.20 | C | B+ |
| 4 | Finland | 74.30 | C+ | B |
| 5 | Switzerland | 73.90 | B | B |
| 6 | Sweden | 73.40 | B | B |
| 7 | Canada | 69.10 | C | B |
| 8 | Chile | 68.20 | B | B |
| 9 | UK | 67.60 | C | B |
| 10 | Singapore | 65.90 | D | B |
| 11 | Germany | 62.20 | D | C+ |
| 12 | Ireland | 62.20 | D | C+ |
| 13 | USA | 57.90 | C | C |
| 14 | France | 57.50 | D | C |
| 15 | Poland | 56.40 | B+ | C |
| 16 | South Africa | 54.00 | B | C |
| 17 | Austria | 52.80 | E | C |
| 18 | Brazil | 52.40 | E | C |
| 19 | Italy | 49.60 | E | D |
| 20 | Mexico | 49.40 | D | D |
| 21 | China | 49.00 | E | D |
| 22 | Indonesia | 45.30 | D | D |
| 23 | Japan | 44.40 | E | D |
| 24 | South Korea | 43.60 | D | D |
| 25 | India | 43.50 | D | D |
| Source: Melbourne Mercer Global Pension Index | ||||
