Markets
Ranked: The Best and Worst Pension Plans, by Country
Ranked: Countries with the Best and Worst Pension Plans
The global population is aging—by 2050, one in six people will be over the age of 65.
As our aging population nears retirement and gets closer to cashing in their pensions, countries need to ensure their pension systems can withstand the extra strain.
This graphic uses data from the Melbourne Mercer Global Pension Index (MMGPI) to showcase which countries are best equipped to support their older citizens, and which ones aren’t.
The Breakdown
Each country’s pension system has been shaped by its own economic and historical context. This makes it difficult to draw precise comparisons between countries—yet there are certain universal elements that typically lead to adequate and stable support for older citizens.
MMGPI organized these universal elements into three sub-indexes:
- Adequacy: The base-level of income, as well as the design of a region’s private pension system.
- Sustainability: The state pension age, the level of advanced funding from government, and the level of government debt.
- Integrity: Regulations and governance put in place to protect plan members.
These three measures were used to rank the pension system of 37 different countries, representing over 63% of the world’s population.
Here’s how each country ranked:
| Country | Overall Value | Adequacy | Sustainability | Integrity |
|---|---|---|---|---|
| Argentina | 39.5 | 43.1 | 31.9 | 44.4 |
| Australia | 75.3 | 70.3 | 73.5 | 85.7 |
| Austria | 53.9 | 68.2 | 22.9 | 74.4 |
| Brazil | 55.9 | 71.8 | 27.7 | 69.8 |
| Canada | 69.2 | 70 | 61.8 | 78.2 |
| Chile | 68.7 | 59.4 | 71.7 | 79.2 |
| China | 48.7 | 60.5 | 36.7 | 46.5 |
| Colombia | 58.4 | 61.4 | 46 | 70.8 |
| Denmark | 80.3 | 77.5 | 82 | 82.2 |
| Finland | 73.6 | 73.2 | 60.7 | 92.3 |
| France | 60.2 | 79.1 | 41 | 56.8 |
| Germany | 66.1 | 78.3 | 44.9 | 76.4 |
| Hong Kong | 61.9 | 54.5 | 54.5 | 86.9 |
| India | 45.8 | 39.9 | 44.9 | 56.3 |
| Indonesia | 52.2 | 46.7 | 47.6 | 67.5 |
| Ireland | 67.3 | 81.5 | 44.6 | 76.3 |
| Italy | 52.2 | 67.4 | 19 | 74.5 |
| Japan | 48.3 | 54.6 | 32.2 | 60.8 |
| Korea | 49.8 | 47.5 | 52.6 | 49.6 |
| Malaysia | 60.6 | 50.5 | 60.5 | 76.9 |
| Mexico | 45.3 | 37.5 | 57.1 | 41.3 |
| Netherlands | 81 | 78.5 | 78.3 | 88.9 |
| New Zealand | 70.1 | 70.9 | 61.5 | 80.7 |
| Norway | 71.2 | 71.6 | 56.8 | 90.6 |
| Peru | 58.5 | 60 | 52.4 | 64.7 |
| Philippines | 43.7 | 39 | 55.5 | 34.7 |
| Poland | 57.4 | 62.5 | 45.3 | 66 |
| Saudi Arabia | 57.1 | 59.6 | 50.5 | 62.2 |
| Singapore | 70.8 | 73.8 | 59.7 | 81.4 |
| South Africa | 52.6 | 42.3 | 46 | 78.4 |
| Spain | 54.7 | 70 | 26.9 | 69.1 |
| Sweden | 72.3 | 67.5 | 72 | 80.2 |
| Switzerland | 66.7 | 57.6 | 65.4 | 83 |
| Thailand | 39.4 | 35.8 | 38.8 | 46.1 |
| Turkey | 42.2 | 42.6 | 27.1 | 62.8 |
| UK | 64.4 | 60 | 55.3 | 84 |
| U.S. | 60.6 | 58.8 | 62.9 | 60.4 |
The Importance of Sustainability
While all three sub-indexes are important to consider when ranking a country’s pension system, sustainability is particularly significant in the modern context. This is because our global population is increasingly skewing older, meaning an influx of people will soon be cashing in their retirement funds. As a consequence, countries need to ensure their pension systems are sustainable over the long-term.
There are several factors that affect a pension system’s sustainability, including a region’s private pension system, the state pension age, and the balance between workers and retirees.
The country with the most sustainable pension system is Denmark. Not only does the country have a strong basic pension plan—it also has a mandatory occupational scheme, which means employers are obligated by law to provide pension plans for their employees.
Adequacy versus Sustainability
Several countries scored high on adequacy but ranked low when it came to sustainability. Here’s a comparison of both measures, and how each country scored:
Ireland took first place for adequacy, but scored relatively low on the sustainability front at 27th place. This can be partly explained by Ireland’s low level of occupational coverage. The country also has a rapidly aging population, which skews the ratio of workers to retirees. By 2050, Ireland’s worker to retiree ratio is estimated to go from 5:1 to 2:1.
Similar to Ireland, Spain ranks high in adequacy but places extremely low in sustainability.
There are several possible explanations for this—while occupational pension schemes exist, they are optional and participation is low. Spain also has a low fertility rate, which means their worker-to-retiree ratio is expected to decrease.
Steps Towards a Better System
All countries have room for improvement—even the highest-ranking ones. Some general recommendations from MMGPI on how to build a better pension system include:
- Increasing the age of retirement: Helps maintain a more balanced worker-to-retiree ratio.
- Enforcing mandatory occupational schemes: Makes employers obligated to provide pension plans for their employees.
- Limiting access to benefits: Prevents people from dipping into their savings preemptively, thus preserving funds until retirement.
- Establishing strong pension assets to fund future liabilities: Ideally, these assets are more than 100% of a country’s GDP.
Pension systems across the globe are under an increasing amount of pressure. It’s time for countries to take a hard look at their pension systems to make sure they’re ready to support their aging population.
Markets
How the Top Cryptocurrencies Performed in 2021
Cryptocurrencies had a breakout year in 2021, providing plenty of volatility and strong returns across crypto’s various sectors.
Energy
The Periodic Table of Commodity Returns (2012-2021)
Energy fuels led the way as commodity prices surged in 2021, with only precious metals providing negative returns.
The Periodic Table of Commodity Returns (2022 Edition)
For investors, 2021 was a year in which nearly every asset class finished in the green, with commodities providing some of the best returns.
The S&P Goldman Sachs Commodity Index (GSCI) was the third best-performing asset class in 2021, returning 37.1% and beating out real estate and all major equity indices.
This graphic from U.S. Global Investors tracks individual commodity returns over the past decade, ranking them based on their individual performance each year.
Commodity Prices Surge in 2021
After a strong performance from commodities (metals especially) in the year prior, 2021 was all about energy commodities.
The top three performers for 2021 were energy fuels, with coal providing the single best annual return of any commodity over the past 10 years at 160.6%. According to U.S. Global Investors, coal was also the least volatile commodity of 2021, meaning investors had a smooth ride as the fossil fuel surged in price.
| Commodity | 2021 Returns |
|---|---|
| Coal | 160.61% |
| Crude Oil | 55.01% |
| Gas | 46.91% |
| Aluminum | 42.18% |
| Zinc | 31.53% |
| Nickel | 26.14% |
| Copper | 25.70% |
| Corn | 22.57% |
| Wheat | 20.34% |
| Lead | 18.32% |
| Gold | -3.64% |
| Platinum | -9.64% |
| Silver | -11.72% |
| Palladium | -22.21% |
Source: U.S. Global Investors
The only commodities in the red this year were precious metals, which failed to stay positive despite rising inflation across goods and asset prices. Gold and silver had returns of -3.6% and -11.7% respectively, with platinum returning -9.6% and palladium, the worst performing commodity of 2021, at -22.2%.
Aside from the precious metals, every other commodity managed double-digit positive returns, with four commodities (crude oil, coal, aluminum, and wheat) having their best single-year performances of the past decade.
Energy Commodities Outperform as the World Reopens
The partial resumption of travel and the reopening of businesses in 2021 were both powerful catalysts that fueled the price rise of energy commodities.
After crude oil’s dip into negative prices in April 2020, black gold had a strong comeback in 2021 as it returned 55.01% while being the most volatile commodity of the year.
Natural gas prices also rose significantly (46.91%), with the UK and Europe’s natural gas prices rising even more as supply constraints came up against the winter demand surge.
Despite being the second worst performer of 2020 with the clean energy transition on the horizon, coal was 2021’s best commodity.
High electricity demand saw coal return in style, especially in China which accounts for one-third of global coal consumption.
Base Metals Beat out Precious Metals
2021 was a tale of two metals, as precious metals and base metals had opposing returns.
Copper, nickel, zinc, aluminum, and lead, all essential for the clean energy transition, kept up last year’s positive returns as the EV batteries and renewable energy technologies caught investors’ attention.
Demand for these energy metals looks set to continue in 2022, with Tesla having already signed a $1.5 billion deal for 75,000 tonnes of nickel with Talon Metals.
On the other end of the spectrum, precious metals simply sunk like a rock last year.
Investors turned to equities, real estate, and even cryptocurrencies to preserve and grow their investments, rather than the traditionally favorable gold (-3.64%) and silver (-11.72%). Platinum and palladium also lagged behind other commodities, only returning -9.64% and -22.21% respectively.
Grains Bring Steady Gains
In a year of over and underperformers, grains kept up their steady track record and notched their fifth year in a row of positive returns.
Both corn and wheat provided double-digit returns, with corn reaching eight-year highs and wheat reaching prices not seen in over nine years. Overall, these two grains followed 2021’s trend of increasing food prices, as the UN Food and Agriculture Organization’s food price index reached a 10-year high, rising by 17.8% over the course of the year.
As inflation across commodities, assets, and consumer goods surged in 2021, investors will now be keeping a sharp eye for a pullback in 2022. We’ll have to wait and see whether or not the Fed’s plans to increase rates and taper asset purchases will manage to provide price stability in commodities.
-
Misc1 week agoFrom Greek to Latin: Visualizing the Evolution of the Alphabet
-
Best of3 weeks agoOur Top 21 Visualizations of 2021
-
Markets2 weeks agoPrediction Consensus: What the Experts See Coming in 2022
-
Technology2 weeks agoCompanies Gone Public in 2021: Visualizing IPO Valuations
-
Technology2 days agoThe 20 Internet Giants That Rule the Web
-
Misc3 weeks agoMapped: Top Trending Searches of 2021 in Every U.S. State
-
Green3 weeks agoMapped: 30 Years of Deforestation and Forest Growth, by Country
-
Markets2 weeks agoHow Every Asset Class, Currency, and S&P 500 Sector Performed in 2021