07/11/2011
By Adam Cadle
Greece, India, China and Thailand face the most severe pressures to reform their pension systems due to increasing sovereign debt, population ageing and relatively low pension coverage, according to the Pensions Sustainability Index (PSI) produced by Allianz Global Investors (AllianzGI).
The index which analyses the state of pension systems across 44 countries also showed that the best prepared countries with regards to the sustainability of their pension systems are Australia, Sweden, Denmark, New Zealand and the Netherlands. According to the analysis, Australia’s success is due to its “two-tier system of lean public pensions and highly developed funded pensions.”
AllianzGI head of international pensions Brigitte Miksa said: “The progress of reform itself differs considerably from country to country, hence the need for an index to show at a glance how countries compare.
“At the heart of Greece’s deteriorating ranking are acute sovereign debt, a quite serious ageing problem and a pension system which remains generous despite recent reforms. In contrast, in India and China, the issue is that pension coverage remains extremely low and adequate measures have not yet been implemented to improve this.”
France and Spain also suffered due to deteriorating public finances, even though pension reform in both countries was stepped up considerably.
The rankings of Asian countries have not changed considerably due to experiencing only minor changes in their debt to GDP ratio.
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