In the recently released 10th annual edition of the Mercer Global Pension Index, the Netherlands’ retirement scheme was rated the best in the world, followed closely by Denmark, Finland, Australia, and Sweden.
The index, which compares 34 countries’ pensions plans, grades the ratio of contributions to returns as well as the resilience demographic change and market volatility when answering the question “how much do you get, when, and with what certainty?”
The Index showed that the Netherlands and Denmark (with scores of 80.3 and 80.2, respectively) both offer A-Grade world-class retirement income systems with good benefits. The results, however, also revealed the growing tension between adequacy and sustainability. This was particularly evident when examining Europe’s results. Denmark, the Netherlands and Sweden all score A or B grades for both in both areas, whereas Austria, Italy, and Spain score a B grade for adequacy but an E grade for sustainability and thereby pointing to important areas needing reform.
The Dutch government currently wants to move away from industry or company-based schemes to individual saving schemes. Unions are demanding further state contributions into the pension system and a freeze of the retirement age at 66 to offer their consent for further reforms.
The Netherlands’ age of retirement is due to rise to 67 in 2022.
The Mercer Index, which is published by the Australian Centre for Financial Studies in collaboration with Mercer and the State Government of Victoria and covers 60% of the world’s population, rated Mexico, India, and Argentina as having the worst pension schemes of the 34 nations reviewed.