The ninth best pension system in the world

Which country has the best pension system in the world? According to a new global survey, Iceland ranks in the top spot regarding how well its population is prepared for retirement.

The latest Mercer CFA Institute Global Pension Index praised Iceland for a well-governed pension system that provides substantial retirement benefits to its citizens.

One feature of the Icelandic pension system that helped it come first was a generous state pension system.

Previous top spot holders The Netherlands came in second place, with Denmark in third.

The index ranks each country with an A to E grade system based on its overall pension provision.

For 11 countries, the scores declined this year due to the economic challenges caused by the Covid-19 pandemic.

According to the report, weaker wage growth and lower asset returns are placing more pressure on retirement income systems.

Thailand was ranked in last place in the report, followed by Argentina and the Philippines. In all cases, the authors assessed their pension systems as having “major weaknesses and/or omissions that need to be addressed.”

The UK came in 9th place this year.

Jamie Jenkins, director of policy and external affairs at Royal London, said:

“While auto-enrolment has been successful in elevating the level of savings in the UK, we can’t rest on our laurels. Much more needs to be done to broaden the scope of workplace savings and iron out the anomalies, especially for the self-employed.  Implementing the recommendations from the 2017 auto-enrolment review will help, and our continuing work to help people who are self-employed will hopefully start to improve their levels of saving for retirement.

“Increasing overall savings levels is key, but also needs to be realistic and factor in the impact of the pandemic on employers’ and employees’ finances, especially as the hike in National Insurance will soon be felt by both groups.”

David Knox, senior partner at Mercer and lead author of the report, said:

“Despite the challenges, now is not the time to put the brakes on pension reform –- in fact, it’s time to accelerate it.”