Based on this assessment, the index graded countries from A to D (and from 0 to 100), with the Netherlands scoring ‘A’ once again after winning the top spot last year.
Other countries in this category featuring a first-class pension system are Iceland, Denmark and Israel.
For the overall pension system, northern European countries were generally graded high, with Finland and Norway taking the top spots in the survey – as high as Australia and Singapore. This means that their systems feature a sound structure and have a number of good features.
Sweden, the UK, Switzerland, as well as Belgium, Ireland, France, Germany, Portugal and Croatia, also earned good grades, with the latter improving significantly since last year’s report.
Meanwhile, some of the world’s worst pension systems are to be found in South Africa, Turkey, the Philippines, Argentina and India, according to the Index.
Behind the grades
When these countries are analysed for the highest level of benefits, while the Netherlands still tops the ranking, France comes second and Uruguay is listed third. When the sustainability of the pension system is examined, Iceland ranks highest, followed by Denmark and Israel.
Finland is the place where the pension system can be trusted the most, with Norway and Hong Kong SAR following its lead.
In an analysis of the worst-performing European countries – Poland came bottom of the list in terms of the level of benefits.
The sustainability of the pension system appears to be the weakest in Austria, Italy and Spain. Interestingly, based on the scoring, Turkey’s system (given 32.2 out of 100) is more certain to deliver in the long-term than these three European countries.
The system is highly trusted across Europe, with Finland scoring the highest, and Poland the lowest in this category.
Risks for the future
Some of the lowest scores across the report were awarded to the sustainability of systems. This suggests that the long-term prospects of pensioners are at risk, taking into consideration the ageing population coupled with increasing life expectancies and falling fertility rates.
Meanwhile, government debt in Europe is at a high level, up to 88.7% of GDP in the eurozone, predicting financing future public expenditures to be expensive. (A country with a high GDP-debt ratio is seen as risky. Its bonds are consequently priced higher costing more to refinance the debt from the market.)
“The pension industry must do better than many of the current arrangements,” said lead author of the report Dr David Knox.
The report includes recommendations and refers to the key areas named by the World Economic Forum that have the biggest impact on financial security in retirement, including providing a “safety net” pension for all, making it easier for people to access cost-effective and well-managed retirement plans and support initiatives to increase contribution rates.
The report adds that retirees need some long-term protection from future risks and that the focus must be on the provision of regular income during the retirement years.
Further recommendations include flexibility and practices such as encouraging older employees to keep working while having access to part of their retirement savings.
Increasing the state pension age and encouraging private savings are also important steps to secure future pension systems, according to the report.
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Publish date : 2024-10-15 21:17:00
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