In a recent interview, Mercer, a prominent human resources consulting firm, unveiled its 2024 Global Pension Index report, highlighting that the Netherlands has once again claimed the top spot among pension systems in 48 countries and regions worldwide. Notably, Singapore ranked highest in Asia, while Australia’s pension system, despite being highly regarded globally, fell to sixth place behind Singapore. Taiwan ranked second to last, improving one position from last year.
The report ranks the top four pension systems globally as those of the Netherlands, Iceland, Denmark, and Israel. The evaluation focuses on the adequacy, sustainability, and integrity of each country’s pension system.
Mercer’s report raises a crucial warning: many people around the world are entering retirement without sufficient guidance to effectively manage their savings. In an interview with Bloomberg, Knox, a senior partner at Mercer and lead author of the report, stated, “With declining birth rates and increasing life expectancy, the combination of an aging population, fewer taxpayers, and government debt expectations will inevitably lead to problems.”
The report emphasizes that longer life spans, combined with lower birth rates, rising interest rates, and escalating healthcare costs, are placing significant pressure on government budgets to support pension plans. As a result, this has contributed to a decrease in the overall index score for this year.
Knox pointed out that the changing global demographics suggest a need for more flexible retirement options rather than fixed retirement ages. He advocated for encouraging individuals to take on part-time work to supplement their pensions, a change that requires a shift in mindset among governments, employers, and workers alike.
Taiwan scored a C with an index score of 53.7, ranking 39th, alongside Japan (36th), South Korea (41st), China (31st), Vietnam (38th), Thailand (43rd), and Brazil (33rd).
India ranked the lowest, trailing behind South Africa, Turkey, the Philippines, and Argentina, all of which received a D grade.
The report indicates a global shift from defined benefit pension plans to defined contribution schemes. Knox emphasized that individuals retiring under defined contribution plans often need assistance in understanding their options.
