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15 Best Countries for Retirement Income: A Report Card

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Most countries are grappling with the social, economic and financial effects of aging populations, making the provision of financial security in retirement critical for individuals and societies alike.

Retirees today also face increasing risks with the reemergence of inflation and rising interest rates, increasing the cost of existing government debt and therefore the ability of some governments to continue their current levels of service. Add to that growing geopolitical uncertainty, which inevitably affects investment returns. 

The Mercer CFA Institute Global Pension Index benchmarks retirement income systems around the world, highlighting challenges and opportunities within each. With the addition of Botswana, Croatia and Kazakhstan to the mix, the 2023 index numbers 47 countries.

The report acknowledges that each system has evolved from particular economic, social, cultural, political and historical circumstances, meaning that no single system can be transplanted from one country and applied, without change, to another. 

It notes, however, that certain features and characteristics are likely to lead to improved financial benefits for the older members of society, an increased likelihood of future sustainability of the system, and a greater level of community trust and confidence. 

The index used three subindexes to measure each retirement income system against more than 50 indicators. The overall index value for each country’s system represents the weighted average of the three subindexes:

  • The adequacy subindex represents the benefits provided, together with some important system design features: 40% weighting
  • The sustainability subindex uses various indicators that influence the likelihood that the current system will be able to provide benefits in the future: 35% weighting
  • The integrity subindex includes many legislative requirements that influence the overall governance and operations of the system, affecting the level of confidence that the citizens of each country have in their system: 25% weighting

Each country’s overall index value received a letter grade, with four assigned an A – indicating that they have a first-class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity. The 15 countries that earned a B or B+ have a system with a sound structure and many good features but also some areas for improvement. 

C+ and C countries have systems with some good features but also major risks and/or shortcomings; without improvement, their efficacy and long-term sustainability can be questioned. Twenty-three of the 47 countries fall into this area.

Five countries received a grade of D, indicating that their systems have some desirable features but also major weaknesses and/or omissions that need to be addressed. No country received the lowest grade, E.

How the United States Ranks

The U.S. index value decreased from 63.9 in 2022 to 63.0 in 2023, primarily because of changes in the integrity subindex. This resulted in a grade of C+. The U.S. system ranks 22nd among the 47 countries. In terms of the subindexes, it ranks 24th for adequacy, 16th for sustainability and 41st for integrity.

The report said the overall index value for the U.S. system could be increased by raising the minimum benefit for low-income retirees, by improving the vesting of benefits for all plan members and maintaining the real value of retained benefits through retirement.

In addition, the U.S. system could reduce preretirement leakage by further limiting access to funds before retirement. 

See the accompanying gallery for the world’s top 15 retirement income systems, according to the Mercer CFA Institute Global Pension Index.