Three European nations—Iceland, Netherlands, and Denmark—have the best pension systems across the globe, as per US consultancy Mercer. With the best retirement income system globally, these countries have dominated the Mercer CFA (Chartered Financial Analyst) Institute's global index since 2021.
As per the report, Iceland with an 84.6 average, the Netherlands with an 84.4 average, and Denmark with an 81.8 average were considered to have the best pension systems over these past three years.
This year, the Netherlands has reportedly got the highest overall index value of 85.0, followed by Iceland with 84.8 and then Demark with 81.3.
As per a report by CNBC, every year Mercer issues a closely-watched annual report that analyses 47 different retirement income systems around the world. The Mercer Index is made up of three sub-categories where it rates a pension system: adequacy, sustainability, and integrity.
The report extends its credits to good benefits, a strong asset base, and sound regulation.
On the other hand, popular European destinations such as Spain, Italy, and Croatia have their fair share of shortcomings, as per the report.
About the top three countries, CNBC quoted Mercer's head of investments and wealth Eimear Walsh as saying, “All three have large industry funds with defined contributions from workers and employers. They have mandatory or quasi-mandatory schemes. These countries benefit from good economies of scale versus more fragmented markets like the U.K. for occupational pensions.”
Adequacy
In the adequacy of income segment, Portugal took the top spot with a score of 86.7 in Mercer's latest report, while the Netherlands was a close second, with a score of 85.6.
On this metric, the lowest rating in Europe reportedly was Poland which came 31st globally with a 59.8 score.
Integrity
Finland had the best score on the integrity metric with a 90.9 rate in 2023. It was followed by Belgium with an 88.2 score and the Netherlands ranked in third place with a score of 87.7. Surprisingly, France with a score of 54.4 was the worst performer in Europe.
Sustainability
In 2023, Iceland has the most sustainable system in Europe with a score of 83.8. Denmark and the Netherlands come right after, with 82.5 and 82.4 scores respectively. Meanwhile, Italy has the lowest score in Europe when it comes to sustainable systems, as it scored a rating of 23.7, followed by Spain with a score of 28.5.
