The latest annual Melbourne Mercer Global Pension report on the adequacy, sustainability and governance of the retirement income systems of 25 countries showed mixed results, with the index scores of 12 countries improving from the year before and 13 declining.
Looking back longer, over the seven years that Mercer and the Australian Centre for Financial Studies have collaborated on the study, the report showed the importance of steps such as adjusting the state pension age, helping more older workers participate in the workforce longer and encouraging greater retirement savings, said David Knox, a Melbourne-based senior partner and senior actuary with Mercer, as well as the lead author of the report.
For the latest year, the report showed Netherlands joining Denmark among nations with a “first-class, robust” retirement system. A rise in that country's household savings rate, one of 40 factors taken into account, helped lift its index score above the 80 mark needed for an A rating from 79.2, or a B, the year before.
The same factor helped lift Mexico's grade above the 50 mark needed for a C to 52.1, from D territory the year before at 49.4.
A better score doesn't necessarily reflect positive news. For example, one of the factors the report cited for Indonesia's improvement to 48.2 from 45.2 the year before was a decline in life expectancy.
Among other countries in the study, Australia stood in third place, with a B+, even as its index reading slipped to 79.6 from 79.9.
Sweden, Switzerland, Finland, Canada, Chile and the U.K. earned Bs, with scores between 65 and 75. The United States remained with C, but its score decreased to 56.3 from 57.9, in part due to an increase in life expectancy.
Singapore retained the highest score among five countries from Asia ex-Japan and Australia, even as its grade slipped to C+, at 64.7, from a B, at 65.9 as net household savings fell and mortality rates declined.
Neil Narale, Singapore-based Asia regional business leader with Mercer's retirement business, said in an e-mail that Singapore could strengthen its score by providing more incentives for, or reducing barriers to the development of corporate retirement plans.
Other Asian nations in the study — Indonesia, China, Japan, Korea and India — remained below 50, although, with the exception of Japan, the report said in large part that reflects the newness of their retirement programs.