The best and worst pension systems in the world – and where South Africa fits in

Mercer has published its Global Pensions Index for 2019, highlighting the best and worst pension systems in the world.

The index covers 37 retirement income systems, representing more than 63% of the world’s population. The primary objective of the research is to benchmark each retirement income system using more than 40 indicators.

An important secondary purpose is to highlight some shortcomings in each system and to suggest possible areas of reform that would provide more adequate retirement benefits, increased sustainability over the longer term and/or greater trust in the private pension system.

The research shows that the Netherlands and Denmark have the best pensions systems in the world – with each securing an A grade for the level of financial security provided in retirement.

Australia came in third with a B+ grade, while the top 10 was rounded out with Finland, Sweden, Norway, Singapore, New Zealand, Canada and Chile all on B.

South Africa 

South Africa received a D ranking – in line with Spain, Italy, Brazil and Indonesia.

The country’s ranking fell slightly from 52.7 in 2018 to 52.6 in 2019 due to a number of small changes in the sustainability sub-index.

“This indicates that the country has pension a system that has some sound features but there also exist major omissions or weaknesses that need to be addressed.

“Without these improvements, its efficacy and sustainability are in doubt,” the report states.

 

Mercer that South Africa’s retirement income system comprises a means-tested public pension and tax-supported voluntary occupational schemes.

It said that the ways that this system could be improved include:

  • Increasing the minimum level of support for the poorest aged individuals
  • Increasing the coverage of employees in occupational pension schemes thereby increasing the level of contributions and assets
  • Introducing a minimum level of mandatory contributions into a retirement savings fund
  • Increasing the level of preservation of benefits when members withdraw from occupational funds
  • Introducing a requirement that part of the retirement benefit from provident fund arrangements must be taken as an income stream (this requirement currently only applies to pension funds and retirement annuities).

Read: South Africa’s massive budget problem

Latest news

Partner Content

Show comments

Follow us

Recommended

The best and worst pension systems in the world – and where South Africa fits in