Pension systems the best in the world in the Netherlands
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The Mercer CFA Institute Global Pension Index has awarded, for the second year running, the Netherlands the golden crown with the top pension system in the world due to robust regulation and a strong asset base.
Netherlands leads the way in pensions with other European countries follow close behind
The report compared 48 countries around the world, where 65% of the world population reside. Iceland, Denmark, Finland and Norway also make it to the top five,while the United Kingdom and Ireland also feature in the top ten. More than 50 different indicators were examined including the level of benefits and how the system can withstand financial stress tests. At the bottom end of the scale, feature, South Africa, Turkey, Argentina, India and the Philippines. The report highlighted particularly low scores in the sustainability of systems, indicating potential risks to the long-term prospects of pensioners. This concern arises from factors such as an aging population, longer life expectancies, and declining fertility rates.
Meanwhile, government debt in Europe remains elevated, reaching 88.7% of GDP in the eurozone, suggesting that financing future public expenditures could become costly. A high GDP-to-debt ratio makes a country appear riskier, leading to higher bond prices and increased costs for refinancing debt through the market. Additionally, for the first time in human history, the number of people aged 65 and above surpasses that of children aged five or younger.
Pension systems must be improved to match aging population
“The pension industry must improve upon many of the current arrangements,” stated Dr. David Knox, the lead author of the report. The report offers recommendations and highlights key areas identified by the World Economic Forum that significantly influence financial security in retirement. These include ensuring a “safety net” pension for everyone, simplifying access to cost-effective and well-managed retirement plans, and supporting initiatives to boost contribution rates.
Additionally, the report emphasizes the need for retirees to have long-term protection against future risks, with a focus on providing a steady income throughout retirement. Further recommendations suggest introducing more flexibility, such as allowing older employees to continue working ,while accessing part of their retirement savings. Increasing the state pension age and promoting private savings are also highlighted as essential measures for securing the future of pension systems in our ageing society.
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