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Ranked: The Best and Worst Pension Plans, by Country

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The Best and Worst Pension Plans, by Country

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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.

CountryOverall ValueAdequacySustainabilityIntegrity
🇦🇷 Argentina41.552.727.743.0
🇦🇺 Australia75.067.475.786.3
🇦🇹 Austria53.065.323.574.5
🇧🇪 Belgium64.574.936.387.4
🇧🇷 Brazil54.771.224.171.2
🇨🇦 Canada69.869.065.776.7
🇨🇱 Chile67.057.668.879.3
🇨🇳 China55.162.643.559.4
🇨🇴 Colombia58.462.046.269.8
🇩🇰 Denmark82.081.183.581.4
🇫🇮 Finland73.371.461.593.1
🇫🇷 France60.579.141.856.8
🇩🇪 Germany67.979.345.481.2
🇭🇰 Hong Kong61.855.151.187.7
🇮🇸 Iceland84.282.784.686.0
🇮🇳 India43.333.541.861.0
🇮🇩 Indonesia50.444.743.669.2
🇮🇪 Ireland68.378.047.482.1
🇮🇱 Israel77.173.676.183.9
🇮🇹 Italy53.468.221.374.9
🇯🇵 Japan49.852.937.561.9
🇰🇷 Korea48.343.452.750.0
🇲🇾 Malaysia59.650.657.576.8
🇲🇽 Mexico49.047.354.743.8
🇳🇱 Netherlands83.582.381.687.9
🇳🇿 New Zealand67.461.862.583.2
🇳🇴 Norway75.281.257.490.2
🇵🇪 Peru55.058.844.264.1
🇵🇭 Philippines42.738.952.535.0
🇵🇱 Poland55.260.941.365.6
🇸🇦 Saudi Arabia58.161.750.962.5
🇸🇬 Singapore70.773.559.881.5
🇿🇦 South Africa53.644.346.578.5
🇪🇸 Spain58.672.928.178.3
🇸🇪 Sweden72.967.873.780.0
🇨🇭 Switzerland70.065.467.281.3
🇹🇼 Taiwan51.840.851.969.3
🇹🇭 Thailand40.635.240.050.0
🇹🇷 Turkey45.847.728.666.7
🇦🇪 UAE59.659.750.272.6
🇬🇧 UK71.673.959.884.4
🇺🇾 Uruguay60.762.149.274.4
🇺🇲 U.S.61.460.963.659.2
Average61.062.251.772.1

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.

gender gap pensions oecd

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.

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Maps

Mapped: The Income a Family Needs to Live Comfortably in Every U.S. State

Families in expensive states require over $270,000 annually to live comfortably.

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A map showing the income that two working adults with two children need to live comfortably in each U.S. state.

The Income a Family Needs to Live Comfortably in Every U.S. State

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Families in the top five most expensive U.S. states require an annual income exceeding $270,000 to live comfortably.

This visualization illustrates the income necessary for two working adults with two children to maintain a comfortable lifestyle in each state.

“Comfortable” is defined as the income needed to cover a 50/30/20 budget, with 50% allocated to necessities like housing and utilities, 30% to discretionary spending, and 20% to savings or investments.

The calculations for family income needed in each state were done by SmartAsset, using the cost of necessities sourced from the MIT Living Wage Calculator, last updated on Feb. 14, 2024.

Massachusetts Tops the List

Massachusetts is the most expensive state to live comfortably in, requiring a total family income of about $301,184. Hawaii ($294,611) comes in second, followed by Connecticut ($279,885).

Housing is one main reason Massachusetts is an expensive state to live in, particularly in the Boston area. In addition, the state also has a high cost of living, including expenses such as healthcare and utilities.

RankStateIncome for 2 working adults raising 2 children
1Massachusetts$301,184
2Hawaii$294,611
3Connecticut$279,885
4New York$278,970
5California$276,723
6Colorado$264,992
7Washington$257,421
8Oregon$257,338
9New Jersey$251,181
10Rhode Island$249,267
11Vermont$248,352
12Minnesota$244,774
13New Hampshire$244,109
14Alaska$242,611
15Maryland$239,450
16Nevada$237,286
17Virginia$235,206
18Illinois$231,962
19Arizona$230,630
20Pennsylvania$230,464
21Maine$229,549
22Delaware$228,966
23Wisconsin$225,056
24Utah$218,483
25Michigan$214,490
26Nebraska$213,075
27Georgia$212,826
28Montana$211,411
28Iowa$211,411
30Idaho$211,245
31North Carolina$209,331
31Ohio$209,331
33Florida$209,082
34Indiana$206,003
35New Mexico$203,923
36Wyoming$203,424
37Missouri$202,259
38North Dakota$202,176
39Texas$201,344
40South Carolina$200,762
41Kansas$196,768
42Tennessee$195,770
43Oklahoma$194,106
44Alabama$193,606
45South Dakota$192,608
46Kentucky$190,112
47Louisiana$189,613
48West Virginia$189,363
49Arkansas$180,794
50Mississippi$177,798

Meanwhile, Mississippi is the least expensive state for a family to live comfortably, requiring $177,798 per year. Arkansas ($180,794) comes in second, followed by West Virginia ($189,363). In common, all these states share low prices of housing.

Learn More About Cost of Living From Visual Capitalist

If you enjoyed this post, be sure to check out this graphic, which ranks the median down payment for a house by U.S. state.

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