Personal Finance
Ranked: The Best and Worst Pension Plans, by Country
The Best and Worst Pension Plans Worldwide
Each year, millions of people around the world leave the workforce to retire.
But as the global population grows older, and the COVID-19 pandemic accelerates the already rising number of retirees, there is still a large degree of variance in the quality of public pension plans around the world.
Which countries have invested in robust public pension programs, and which lag behind?
This graphic, using 2021 data from Mercer CFA Institute Global Pension Index, compares retirement income systems worldwide.
How the Index Ranks Pension Plans
Because a country’s pension system is unique to its particular economic and historical context, it’s difficult to draw direct comparisons. However, there are certain elements that pension experts see as universally positive, and that lead to better financial support for older citizens.
As with previous rankings, Mercer and the CFA Institute 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 the 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 43 different countries, representing more than 65% of the world’s population. This year’s iteration of the index notably includes four new countries—Iceland, Taiwan, UAE, and Uruguay.
The Full Ranking
When it comes to the best pension plans across the globe, Iceland, the Netherlands, and Denmark have the top three systems.
Country | Overall Value | Adequacy | Sustainability | Integrity |
---|---|---|---|---|
🇦🇷 Argentina | 41.5 | 52.7 | 27.7 | 43.0 |
🇦🇺 Australia | 75.0 | 67.4 | 75.7 | 86.3 |
🇦🇹 Austria | 53.0 | 65.3 | 23.5 | 74.5 |
🇧🇪 Belgium | 64.5 | 74.9 | 36.3 | 87.4 |
🇧🇷 Brazil | 54.7 | 71.2 | 24.1 | 71.2 |
🇨🇦 Canada | 69.8 | 69.0 | 65.7 | 76.7 |
🇨🇱 Chile | 67.0 | 57.6 | 68.8 | 79.3 |
🇨🇳 China | 55.1 | 62.6 | 43.5 | 59.4 |
🇨🇴 Colombia | 58.4 | 62.0 | 46.2 | 69.8 |
🇩🇰 Denmark | 82.0 | 81.1 | 83.5 | 81.4 |
🇫🇮 Finland | 73.3 | 71.4 | 61.5 | 93.1 |
🇫🇷 France | 60.5 | 79.1 | 41.8 | 56.8 |
🇩🇪 Germany | 67.9 | 79.3 | 45.4 | 81.2 |
ðŸ‡ðŸ‡° Hong Kong | 61.8 | 55.1 | 51.1 | 87.7 |
🇮🇸 Iceland | 84.2 | 82.7 | 84.6 | 86.0 |
🇮🇳 India | 43.3 | 33.5 | 41.8 | 61.0 |
🇮🇩 Indonesia | 50.4 | 44.7 | 43.6 | 69.2 |
🇮🇪 Ireland | 68.3 | 78.0 | 47.4 | 82.1 |
🇮🇱 Israel | 77.1 | 73.6 | 76.1 | 83.9 |
🇮🇹 Italy | 53.4 | 68.2 | 21.3 | 74.9 |
🇯🇵 Japan | 49.8 | 52.9 | 37.5 | 61.9 |
🇰🇷 Korea | 48.3 | 43.4 | 52.7 | 50.0 |
🇲🇾 Malaysia | 59.6 | 50.6 | 57.5 | 76.8 |
🇲🇽 Mexico | 49.0 | 47.3 | 54.7 | 43.8 |
🇳🇱 Netherlands | 83.5 | 82.3 | 81.6 | 87.9 |
🇳🇿 New Zealand | 67.4 | 61.8 | 62.5 | 83.2 |
🇳🇴 Norway | 75.2 | 81.2 | 57.4 | 90.2 |
🇵🇪 Peru | 55.0 | 58.8 | 44.2 | 64.1 |
🇵🇠Philippines | 42.7 | 38.9 | 52.5 | 35.0 |
🇵🇱 Poland | 55.2 | 60.9 | 41.3 | 65.6 |
🇸🇦 Saudi Arabia | 58.1 | 61.7 | 50.9 | 62.5 |
🇸🇬 Singapore | 70.7 | 73.5 | 59.8 | 81.5 |
🇿🇦 South Africa | 53.6 | 44.3 | 46.5 | 78.5 |
🇪🇸 Spain | 58.6 | 72.9 | 28.1 | 78.3 |
🇸🇪 Sweden | 72.9 | 67.8 | 73.7 | 80.0 |
🇨🇠Switzerland | 70.0 | 65.4 | 67.2 | 81.3 |
🇹🇼 Taiwan | 51.8 | 40.8 | 51.9 | 69.3 |
🇹🇠Thailand | 40.6 | 35.2 | 40.0 | 50.0 |
🇹🇷 Turkey | 45.8 | 47.7 | 28.6 | 66.7 |
🇦🇪 UAE | 59.6 | 59.7 | 50.2 | 72.6 |
🇬🇧 UK | 71.6 | 73.9 | 59.8 | 84.4 |
🇺🇾 Uruguay | 60.7 | 62.1 | 49.2 | 74.4 |
🇺🇲 U.S. | 61.4 | 60.9 | 63.6 | 59.2 |
Average | 61.0 | 62.2 | 51.7 | 72.1 |
Iceland’s system ranks high across all three sub-indexes. The country offers a state pension with two components: mandatory contributions from both employees and employers, and optional contributions to state-approved pension products.
Its system has a high contribution rate, which ultimately results in a generous state pension that retirees in Iceland can tap into. The country also has a relatively low gender pension gap, meaning the difference between the average female pension versus male pension is relatively small—especially compared to other OECD countries.
On the opposite end of the spectrum, the Philippines, Argentina, and Thailand scored the lowest on the ranking.
Thailand scores particularly low in the adequacy category, with a score of 35.2. To increase its score, Thailand could increase the minimum payments for its poorest demographic and include more employees in occupational pension schemes.
Recommendations for Better Pension Plans
According to the index, countries seem to be steadily improving their pension systems. From 2020 to 2021, the average score of the overall index increased by 1.0.
With an average of 60.7, the index shows that most countries’ systems have some good features, but they also have some significant shortcomings that could be addressed by the following recommendations:
- Boosting adequacy by increasing coverage, and including more employees in private pensions systems.
- Increasing sustainability by adjusting retirement pension age to reflect increasing life expectancy, and promoting higher workforce participation from older citizens.
- Raise integrity by introducing policies that reduce the gender pension gap and discrepancies amongst minorities.
Countries that implement even a few of these changes could make a huge difference for their next generation of retirees—and those that don’t could be in trouble in the near future.
Personal Finance
Ranked: What People Value Most in a Financial Advisor
Positive reviews and recommendations are some of the least important factors—so what do people look for in a financial advisor?
Ranked: What People Value Most in a Financial Advisor
Are advisors putting their focus where it matters? You might think that positive reviews and recommendations would be a top consideration for people choosing a financial advisor. However, other qualities appear to be much more important.
This graphic uses data from Morningstar’s Voice of the Advisor report to outline what people value most in a financial advisor.
The Qualities Investors Value
Morningstar surveyed 400 people: 100 Caucasian women, 150 women of color, and 150 men of color. The values below show how often people chose an item as most or least important when working with an advisor.
Quality | Most Important | Least Important |
---|---|---|
Expertise and knowledge in financial planning and investments | 60% | 11% |
Personalized financial advice that meets my specific goals and needs | 54% | 16% |
Ability to understand my risk tolerance and appropriately align my investments | 47% | 17% |
Specialization in specific financial situations, such as retirement planning | 45% | 17% |
Ability to communicate complex financial concepts in an understandable way | 42% | 22% |
Transparent fee structure and pricing for my advisor’s services | 42% | 22% |
Trust and rapport established during the initial meetings with my advisor | 36% | 24% |
Ability to incorporate investment options that reflect my values | 22% | 41% |
Positive online reviews or ratings about my advisor’s services | 22% | 46% |
Recommendations from friends or family who had a positive experience with my advisor | 20% | 47% |
Commitment to diversity and inclusion, making me feel comfortable and respected | 20% | 47% |
Recommendations from other professionals, such as accountants or attorneys | 19% | 50% |
Shares a similar background or cultural understanding | 10% | 68% |
Participants were asked the following question: “On each screen, we will show you 3 items to think about when working with a financial advisor. Select which one is most important and which one is the least important of the items. You will see more than one screen and items may appear more than once.”
Enjoying this content? Dive into more insights in the Voice of the Advisor Report:
Even among a survey pool that was mostly people of color, the majority of respondents didn’t think a commitment to diversity or a shared background were important.
Instead, three of the top four factors were related to personalization.
Personalization: A Key Quality in a Financial Advisor
People cared deeply about personalization regardless of gender and race. It was even more important to those with more than $250,000 in assets, suggesting that personalization may become more critical as a person’s portfolio value increases.
Even investors not currently working with an advisor and non-investors noted that personalization would be a top quality they would look for in a financial advisor.
Within personalization, people noted risk management was a very important element. Financial advisors can highlight their ability to tailor financial plans based on each person’s risk tolerance in order to attract clients.
Looking for tips on how to grow your advisory business? Get insights on what investors want, and how other advisors are evolving, in Morningstar’s Voice of the Advisor report.
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