The Netherlands tops the Global Pension Index, but is the country with the lowest ranking

Mercer recently released its 2024 Global Pension Index report, revealing that the Netherlands has once again topped the rankings among 48 countries and regions worldwide for its pension system. Singapore ranks highest in Asia, while Australia’s pension system remains well-regarded globally but has slipped to sixth place, following Singapore. Taiwan finds itself near the bottom at 39th, improving just one spot from last year.

According to the report, the top four pension systems globally are in the Netherlands, Iceland, Denmark, and Israel. The evaluation is based on the adequacy, sustainability, and integrity of pension systems across different countries.

The report also highlights a significant concern: many individuals are approaching retirement without the guidance necessary to effectively manage their savings. Knox, a senior partner at Mercer and the report’s lead author, emphasized in a Bloomberg interview, “With declining birth rates and increasing life expectancy, combined with an aging population, fewer taxpayers, and rising government debts, we are bound to encounter issues somewhere along the line.”

The findings further indicate that the pressures of longer life spans, decreasing fertility rates, high interest rates, and escalating care costs are weighing heavily on government budgets, thereby impacting the overall index score this year.

Knox stressed that with demographic changes taking place globally, it is crucial for countries to adopt more flexible retirement solutions rather than adhering to fixed retirement ages. He advocates for encouraging individuals to engage in part-time work to bolster their retirement savings, suggesting that a shift in mindset is necessary from governments, employers, and workers alike.

Taiwan received a ‘C’ rating with a score of 53.7, placing it at 39th, alongside Japan (36th), South Korea (41st), China (31st), Vietnam (38th), Thailand (43rd), and Brazil (33rd).

At the bottom of the list is India, trailing behind South Africa, Turkey, the Philippines, and Argentina, all of which received a ‘D’ grade.

The report notes a global transition from defined benefit pension plans to defined contribution schemes. Knox pointed out that individuals retiring under these defined contribution systems often require assistance in navigating their choices.