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 |
| 🇭🇰 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: The Best Countries to Retire In
Which countries are the best equipped to support their aging population? This graphic show the best countries to retire in around the world.
Ranked: The Best Countries to Retire in Around the World
Our global population is getting older. By 2050, the OECD predicts that 30% of people worldwide will be aged 65 or over.
While some countries are relatively prepared to handle this increase in the elderly demographic, others are already feeling the squeeze and struggling with the challenges that come with a rapidly aging population.
Which countries are the best equipped to support their senior citizens? This graphic uses data from the 2022 Natixis Global Retirement Index to show the best countries to retire in around the world, based on several different factors that we’ll dig into below.
What Makes a Country Retirement-Friendly?
When people consider what makes a place an ideal retirement location, it’s natural to think about white sand beaches, hot climates, and endless sunny days. And, in truth, the right net worth opens up a world of opportunity of where to enjoy one’s golden years.
The Global Retirement Index (GRI) examines retirement from different, more quantitative perspective. The annual report looks at 44 different countries and ranks them based on their retirement security. The index considers 18 factors, which are grouped into four overarching categories:
- Health: Health spend per capita, life expectancy, and non-insured health spend.
- Quality of Life: Happiness levels, water and sanitation, air quality, other environmental factors, and biodiversity/habitat.
- Material Wellbeing: Income per capita, income equality, and employment levels.
- Finances in Retirement: Government debt, old-age dependency, interest rates, inflation, governance, tax pressure, and bank non-performing loans.
Using these 18 metrics, a score from 0.01 to 1 is determined for each country, which is then converted to a percentage. For a more detailed explanation of the report’s methodology, explore Appendix A (page 72) of the report.
The Top 25 Best Countries to Retire in
With an overall score of 81%, Norway comes in at number one as the most retirement-friendly country on the list.
| Rank | Country | Score | Health | Quality of Life | Material Wellbeing | Finances in Retirement |
|---|---|---|---|---|---|---|
| 1 | 🇳🇴 Norway | 81% | 91% | 87% | 79% | 69% |
| 2 | 🇨🇭 Switzerland | 80% | 90% | 86% | 69% | 74% |
| 3 | 🇮🇸 Iceland | 79% | 88% | 86% | 77% | 68% |
| 4 | 🇮🇪 Ireland | 76% | 89% | 80% | 67% | 70% |
| 5 | 🇦🇺 Australia | 75% | 88% | 77% | 66% | 72% |
| 6 | 🇳🇿 New Zealand | 75% | 85% | 81% | 64% | 71% |
| 7 | 🇱🇺 Luxembourg | 75% | 91% | 81% | 72% | 59% |
| 8 | 🇳🇱 Netherlands | 75% | 89% | 80% | 78% | 56% |
| 9 | 🇩🇰 Denmark | 74% | 86% | 88% | 76% | 54% |
| 10 | 🇨🇿 Czech Republic | 73% | 76% | 68% | 84% | 64% |
| 11 | 🇩🇪 Germany | 72% | 87% | 80% | 71% | 55% |
| 12 | 🇫🇮 Finland | 71% | 84% | 89% | 63% | 55% |
| 13 | 🇸🇪 Sweden | 71% | 90% | 87% | 59% | 56% |
| 14 | 🇦🇹 Austria | 71% | 86% | 82% | 69% | 54% |
| 15 | 🇨🇦 Canada | 71% | 87% | 74% | 58% | 67% |
| 16 | 🇮🇱 Israel | 70% | 82% | 74% | 60% | 66% |
| 17 | 🇰🇷 South Korea | 70% | 80% | 59% | 68% | 73% |
| 18 | 🇺🇸 United States | 69% | 85% | 72% | 56% | 67% |
| 19 | 🇬🇧 United Kingdom | 69% | 83% | 82% | 61% | 55% |
| 20 | 🇧🇪 Belgium | 69% | 85% | 74% | 70% | 51% |
| 21 | 🇸🇮 Slovenia | 69% | 82% | 69% | 77% | 51% |
| 22 | 🇯🇵 Japan | 69% | 91% | 67% | 72% | 51% |
| 23 | 🇲🇹 Malta | 68% | 78% | 61% | 72% | 63% |
| 24 | 🇫🇷 France | 66% | 90% | 78% | 57% | 48% |
| 25 | 🇪🇪 Estonia | 66% | 68% | 68% | 60% | 68% |
Norway is at the top of this year’s ranking for several reasons. For starters, it achieved the highest score in the Health category, largely because of its high average life expectancy, which is 83 years old, or 9 years longer than the global average.
Norway also has the highest score of all the countries for Governance, a category gauged by assessing country corruption levels, political stability, and government effectiveness, and is in a three-way tie with Japan and Luxembourg in the Health category.
Second on the list is another European country, Switzerland, with an overall score of 80%. It’s the highest-ranked country for environmental factors, and it also has the highest overall score in the Finances in Retirement category.
A Regional Breakdown
While European countries dominate the top 10 in the ranking, how does Europe rank as a region as a whole? Before diving in, it’s important to note that the study actually breaks up Europe into two sections: Eastern Europe (grouped with Central Asia) and Western Europe.
| Rank | Region | Overall Score |
|---|---|---|
| 1 | North America | 69% |
| 2 | Western Europe | 66% |
| 3 | Eastern Europe and Central Asia | 49% |
| 4 | Latin America | 37% |
| 5 | Asia Pacific | 32% |
And from a regional perspective, North America comes in first place despite the fact no countries in the region made it into the top 10. North America only has two countries included in the ranking: Canada (#15) and the U.S. (#18), which both rank relatively high.
In contrast, Western and Eastern Europe have more countries to account for, which ultimately lowers their regional average.
The Future of Retirement
As longevity rises and the retirement aged population continues to increase worldwide, many countries are opting to change their pension policies in an effort to encourage people to stay in the workforce longer.
For instance, in 2018, people in the UK could claim their State Pension once they turned 65. By 2028, this age requirement will be raised to 67.
However, government intervention may not be necessary, as many people around the world are already staying in the workforce beyond the traditional retirement age (perhaps more out of necessity than choice).
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