Denmark and the Netherlands have been ranked as the top two countries in the Melbourne Mercer Global Pension Index.

In its eighth annual index, Mercer scored Denmark and the Netherlands as grade A countries, with a score of over 80 out of 100, meaning they have first class, robust retirement income systems that deliver good benefits and are sustainable.

Denmark held onto the top position with a total score of 80.5. The index indicated that the primary reasons for its ranking are its well-funded pension system with good coverage, a high level of assets and contributions, the provision of adequate benefits and a private pension system with developed regulations.

Finland, Sweeden and Switzerland followed closely behind with a B grading and Ireland was rated just above the UK with a C grade.

While these countries have performed well, the index highlighted the importance of countries to consider and prepare for increased life expectancies by seven to 14 years in most countries during the last 40 years. This equates to an average of one additional year for every four years. “A significant result that cannot be ignored in the ongoing reform of the pension system” Mercer said.

This year’s index is the Victorian Government of Australia and the Australian Centre for Financial Studies’ eighth annual index which objectively ranks both the publicly funded and private components of 27 countries’ pension systems. The index considers the impact of the rapidly ageing populations and preparedness of countries’ retirement systems to deal with the significant financial pressures this presents.

Mercer senior partner and author of the report Dr David Knox said: “The impact of longer life expectancies, combined with global declining birth rates, is much more significant than has been recognised by many governments and communities.

“Without changes to retirement ages and ages for eligibility to access social security and private pensions, there will be increasing pressure on global retirement systems to the detriment of the financial security provided to older members of our society.

“It is a political imperative that all countries, regardless of their size, and current standing on the MMGPI, implement the necessary policy changes to withstand future challenges presented by the globally ageing population”.

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