South Africa ranks near the bottom of World’s best and worst pensions in 2023: Netherlands reclaims top spot

The Netherlands reclaims its crown as the world’s premier pension system, as reported by Bloomberg’s annual global index. With retirement systems worldwide facing unprecedented pressure, Iceland, last year’s leader, slips to second place, followed by Denmark in third. Israel stands alone with an ‘A’ rating in the Mercer CFA Institute Global Pension Index. The Dutch system is evolving from collective to individual structures, promising continued strong benefits. Nevertheless, many countries grapple with aging populations, government debt, and inflation, making personal retirement planning increasingly crucial. Argentina ranks lowest, while the US falls to 22nd place, Australia ranks 5th, the UK 10th, Japan 30th, and China 35th. As birth rates decline, sustainability scores suffer in economies like Italy and Spain. Several Asian nations, including China, Korea, Singapore, and Japan, have initiated reforms to boost their scores. Additionally, artificial intelligence holds the potential to enhance pension systems, enabling more informed decision-making and potentially higher investment returns. The future may empower individuals to secure their financial well-being in retirement.

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These Are The World’s Best And Worst Pensions in 2023

By Ainsley Thomson

The Netherlands has reclaimed its title as the world’s best pension system, according to an annual global index, which warned retirement across the globe is under pressure as never before.

Iceland, which was top last year, came in second, with Denmark ranked in third place. Israel was the only other nation to get an ‘A’ rating in the Mercer CFA Institute Global Pension Index, which scores systems based on their adequacy, sustainability and integrity. 

The Netherlands is currently reforming its pension program from a collective structure to a more individual approach. Even so, the report said the system will still offer good benefits following the change, supported by a strong asset base and sound regulation.

Pension systems in most countries, though, are under stress from aging populations, rising government debt and high inflation, while also grappling with challenges such as the inclusion of gig economy workers.

“The bottom line is around the world, people have to start looking after themselves in retirement,” David Knox, senior partner at Mercer and the report’s lead author, said in an interview. “We can no longer just rely on social security or public pensions.” 

Argentina was the lowest ranked country out of the 47 surveyed, while the US came 22nd — two places lower than last year. Australia was ranked 5th, the UK 10th, Japan 30th and China was in 35th place.

Anger Over Longer Road to Retirement Ripples Across Globe

Falling birth rates have placed pressure on several economies and pension systems over the longer term, the report said, which has negatively affected the sustainability scores for countries like Italy and Spain. The report also singled out several Asian systems, including China, Korea, Singapore and Japan, which it said have undertaken reform to improve their scores in the past five years.

Artificial intelligence has the potential to improve pension systems by leading to more efficient and better-informed decision-making, which could potentially lead to higher real investment returns, Knox said, adding that the technology may also help individuals make long-term financial decisions.

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© 2023 Bloomberg L.P.