The Netherlands has retained the top spot on the Mercer CFA Institute Global Pension Index 2024, with a score of 84.8 followed by Iceland (83.4) and Denmark (81.6).

The annual index has seen the Netherlands, which is currently transitioning to a DC-style pension system from a DB structure, lead for the second year. The report noted that the Netherlands’ pension system features strong regulations and offers participants guidance regarding their pensions.

Other European countries such as Finland (75.9), Norway (75.2) and Sweden (74.3) also featured in the top 10. The UK (71.6), Switzerland (71.5), Belgium (68.6), Ireland (68.1), France (68) and Germany (67.3) featured in the top 20.

The Index uses the weighted average of the sub-indices of adequacy, sustainability and integrity. For each sub-index, the systems with the highest values were the Netherlands for adequacy (86.3), Iceland for sustainability (84.3) and Finland for integrity (90.8).

Increasing longevity, high interest rates and rising costs of care have put increased pressure on government budgets to support pension programmes, causing scores to be slightly lower this year overall.

Several systems, including China, Mexico, India and France, have undertaken recent reforms to improve their scores in recent years. However, the most recent pension reforms in China, announced in September, are not reflected in its Index score.

Commenting on how global pension systems are evolving, CFA and CFA Institute president and CEO, Margaret Franklin, said: “The ongoing shift to DC pension plans introduces many financial planning challenges, which are falling squarely on the shoulders of tomorrow’s retirees.

“DC plans require individuals to make complex financial planning decisions that may significantly impact their financial circumstances, and yet many individuals are not well prepared to manage the required decisions. The Index serves as an important reminder of the gaps that remain in providing long-term financial security and advice for individuals. The need for credentialed and ethical financial advisors once again stands out, and that’s why we have launched new initiatives in the private wealth space to meet this gap.”

Furthermore, Mercer senior partner and lead author of the report, Dr David Knox, added that retirement income system reform needs to continue as the financial needs of retirees and their work expectations evolve.

“There is no single solution to getting retirement systems onto more solid ground. Now is the time for governments, policymakers, the pension industry and employers to work together to ensure that older populations are treated with dignity and can maintain a lifestyle similar to what they experienced through their working years,” he said.

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