Mercer CFA Institute Global Pension Index released its annual report that looks at 44 global pension systems, which account for 65% of the world’s population, and ranks them from the best to worst.
“It’s essential for individuals to have strong retirement plans in the works because high levels of inflation, rising interest rates, and greater uncertainty about economic conditions, are adding additional financial pressure to the existing systems,” Senior Partner at Mercer and lead author of the study, Dr. David Knox stated in the report.
“Households will have to consider what the right balance is between receiving a steady income, access to some capital, and protection from future risks, given the many uncertainties faced by retirees,” Dr. Knox added.
“It is critical that we understand whether or not the retirement income systems around the world will be able to meet the needs and expectations of their communities for decades to come.”
No. 1 country with the best pension system in 2022: Iceland
Overall Grade: A
Overall Score: 84.7
Iceland was found to have a healthy mix of public and private sector pensions.
In Iceland, according to the European Commission website, you must have lived in the country for at least 40 years or more, from ages 16 to 67, to take full advantage of its old-age pension.
The country’s pension programs are income-related, meaning the amount can decrease if you have other income and be canceled entirely if your income exceeds a certain amount.
Top countries with the best pensions in 2022
- Iceland
- Netherlands
- Denmark
- Israel
- Finland
- Australia
- Norway
- Sweden
- Singapore
- U.K: England, Scotland, Wales and Northern Ireland
The Netherlands ranked second, closely following Iceland, with an overall grade of A and a score of 84.6.
According to the European Commission website, the Dutch pension system consists of three pillars: the General Old Age Pensions Act (AOW), supplementary pension accrual via the employer, and supplementary individual pension policies.
If you live or work in the Netherlands, you are insured under the AOW, and when you reach the statutory retirement age (66 years and seven months old in 2022), you are eligible to receive it.
Denmark took the third spot on the list. It had an overall grade of A and an overall score of 82.
The country offers retirees the option to receive early retirement when they are 1-3 years from the public retirement age (67-69 in 2022), according to the European Commission.
Although it wasn’t in the top 10, the United States ranked 20th on the list. It had an overall grade of C+ and a score of 63.9.
Portugal ranked on the list for the first time in 24th place, and Mexico was highlighted in the report as showing the most improvement due to pension reform.
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Source: CNBC