The Strategist

Analysts name countries with best and worst pension systems

10/20/2020 - 05:32

Analysts have rated countries with the best and worst pension systems. The pension systems of the Netherlands and Denmark were recognised as the most reliable, with Argentina and Thailand taking the last place. Because of the pandemic, residents of these and other countries will have to work longer and expect lower payments in their old age.

Consulting company Mercer and the CFA Institute have published an annual rating of pension systems in different countries. Criteria and results of the ranking are provided by Bloomberg. 

The first two places in the ranking were occupied by the Netherlands and Denmark, which have been keeping the leadership position for several years, writes Bloomberg. Analysts praised the governments of these countries for not allowing the population to get into their pension savings during the crisis, which would have worsened their situation after retirement.

In turn, Australians and Chileans have been allowed to use their savings early, which, according to experts from Mercer and the CFA Institute, "may improve the financial situation of citizens in the short term, but jeopardizes their savings in the future" and "will have huge consequences that will affect the social and economic spheres".

The US pension system was ranked 18th. The authors noted that it has good features, "but also serious risks and/or deficiencies that need to be addressed". The researchers advised the authorities to increase the minimum pension for low-income pensioners and to increase social security funding.

Japan was ranked 32nd out of 39 possible because its pension system has demonstrated "serious shortcomings and/or shortcomings that need to be corrected". Analysts advised the Japanese government to raise the retirement age, as life expectancy in the country is steadily increasing. 

In the latest ranking for Thailand and Argentina, experts told the government to increase support for the poorest and improve the management of private pension funds.