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In Asia, Singapore, Hong Kong, and Malaysia topped the rankings, coming in ninth, 19th, and 23rd, respectively, on the global level.

Singapore, Hong Kong, and Malaysia have been ranked the top three markets with the best retirement income systems in Asia, coming in ninth, 19th, and 23rd, respectively, on a global level.

A total of 44 retirement systems were reviewed in the 14th annual Mercer CFA Institute Global Pension Index (MCGPI), accounting for 65% of the world’s population. The MCGPI benchmarks retirement income systems around the world, highlighting shortcomings in each system, and suggesting possible areas of reform. Each system this year was measured through three sub-indices: sustainability, adequacy, and integrity. 

An overview: How Asian retirement systems fare

According to the findings, while Asia's retirement systems have made progress over the years, they still "continue to lag" when compared globally, with the region's average overall index value standing at 53, lower than the global average of 63. 

The findings also highlighted that while Singapore saw a dip in its overall index value in 2021 (74.1; grade B), it bounced back this year due mainly to the revised scoring matrix and an increase in net replacement rates. Among the overall Asian markets reviewed, most retirement income systems saw overall improvements except for Mainland China (54.5; grade C), Indonesia (49.2; grade D), and the Philippines (42; grade D).

Meanwhile, the most improvement in scoring, in the Asia region, was seen in Malaysia (63.1) and Japan (54.5), with the former jumping from C to a C+ and the latter earning a C, up from its D in 2021. Aside from the revised scoring matrix, Malaysia’s increase was also due mainly to higher net replacement rates, while Japan had a revised approach relating to pension plan coverage, as noted in the index. 

Finally, Korea (51.1) also jumped up to a grade C, with Hong Kong (64.7; grade C+), India (44.4; grade D), and Taiwan (52.9; grade C) also scoring better than the year before. On the other hand, Thailand (41.7, grade D) still has the lowest index value globally but is "showing steady progress."

A global lens: Top retirement income systems in the world

On the global stage, Iceland's retirement income system topped the rankings for the second consecutive year, scoring a total of 84.7 (grade A), followed very closely by the Netherlands (84.6, grade A) and Denmark (82, grade A), both retaining their spots; and Israel (79.8, grade B+) and Finland (77.2, B+) rounding up the top five.

While this was so, the other end of the index saw Argentina (43.3, grade D), the Philippines, and Thailand making up the bottom three.

The top 15 retirement systems in the world are:

   System  Overall grade  Overall score  Adequacy Sustainability   Integrity
1  Iceland  A  84.7  85.8  83.8  84.4
2  The Netherlands  A  84.6  84.9  81.9  87.8
3  Denmark  A  82.0  81.4  82.5   82.1
4  Israel  B+  79.8  75.7  81.9  83.2
5  Finland  B+  77.2  77.5  65.3  93.3
6  Australia  B+  76.8  70.2  77.2  86.8
7  Norway  B+  75.3  79.0  60.4  90.3
8  Sweden  B  74.6  70.6  75.7  79.5
9  Singapore  B  74.1  77.3  65.4  81.0
10  The UK  B  73.7  76.5  63.9  83.0
11  Switzerland  B  72.3  68.7  70.5  80.7
12  Uruguay  B  71.5  84.5  50.6  79.8
13  Canada  B  70.6  70.8  64.7  78.6
14  Ireland  B  70.0  75.9  53.5  83.7
15  New Zealand  B  68.8  64.0  64.7  82.1

 

[FULL RANKINGS


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