Pension consultancy Mercer provides an annual list looking at how retirement is done around the world. Each country is handed an overall scored based on three metrics:
- Adequacy of the pension provision
- Sustainability of the system
- Integrity of pension schemes
This is then translated into a grade ranging from D for the lowest scoring to A for the highest.
Data is collected in each section from sources such as the Organisation for Economic Co-operation and Development (OECD). Mercer also considers regulations in each country and the difference between defined benefit (DB) and defined contribution (DC) schemes.
This year has obviously posed more challenges for countries due to the Covid-19 pandemic.
The economic recession caused by the global health crisis has led to reduced pension contributions, lower investment returns and higher government debt in most countries.
Inevitably, this will impact future pensions, meaning some people will have to work longer while others will have to settle for a lower standard of living in retirement.
It is critical that governments reflect on the strengths and weaknesses of their systems to ensure better long-term outcomes for retirees.
32 – Japan Overall index grade: D
29 – Italy Overall index grade: C
20 – France Overall index grade: C+
14 – *Ireland Overall index grade B
*Ireland’s overall score fell from 67.3 in 2019 to 65 this year due to changes to OECD minimum pension level. It also saw a reduction in the score calculated to cover how well a pension replaces a worker’s income. Improvement could be made by increasing the regulation of private schemes and reducing government debt.
11 – Germany Overall index grade B
6 – Sweden Overall index grade B
2 – Denmark Overall index grade A
1 – Netherlands Overall index grade A