Many retirement systems sagged under the weight of the coronavirus pandemic in areas such as adequacy and sustainability, shows Mercer's latest annual ranking, although governance improved.
The 2020 Mercer CFA Institute Global Pension Index rankings — which award up to 40 points for adequacy, 35 points for sustainability and 25 points for governance — were little changed from the year before, even as over half of the 37 retirement systems Mercer surveyed scored lower.
But if the year-on-year changes were fairly subtle — the U.S., for example, edged down to 60.3 from 60.6 the year before while Japan rose slightly to 48.5 from 48.3 — the ripple effects from the COVID-19 crisis promise to be more far-reaching, Mercer executives warned in a report of the rankings.
"We are now living in a very different, and more uncertain, world," where challenges previously outlined will become more difficult to address, David Knox, a Melbourne-based senior partner with Mercer, said in the report.
Significant growth in government debt will undermine social protection systems while the growing importance of the "gig" economy will threaten coverage levels, he noted.
Meanwhile, "changes in capital markets with near-zero or negative interest rates raise significant questions about the most appropriate investment strategies for pension funds," he said.