Assessment of pension schemes

In collaboration with Mercer, the Monash Centre for Financial Studies has published the Melbourne Mercer Global Pension Index 2019. The different valuation categories are ‘adequacy’ (40%), ‘sustainability’ (35%) and ‘integrity’ (25%). The grades awarded result from the total number of points achieved in all three categories: from A-level (above 80 points) to E-level (below 35). 37 countries were under review, from large economic powers such as the USA, Germany, and China to countries such as Thailand, the Philippines, and Columbia.

Not more than two European countries, the Netherlands and Denmark, were awarded an A-level grade. With 66.1 points and a B-level grade, Germany is #13. With a C-level grade, Austria (53.9) and Italy (52.2), ranked #25 and #27 respectively, are the weakest performers among European countries. With 39.5 and 39.4 points respectively, the Argentine and Thailand achieved a D-level grade and thus finished bottom of the league.

The study gives general advice on how to improve pension schemes, and recommends among other things:

• To raise the retirement age to accommodate to the rise in life expectancy;
  
• To further wider labour market participation of the elderly;
  
• To further / to offer incentives geared at encouraging private pension schemes;
  
• To broaden the public having acces to the pension scheme (e.g. to include the self-employed).
  

Apart from that, the study also makes country-specific recommendations on how to improve each system.

The Better Finance’s Report takes a deeper look into the European pension schemes: „Pensions Savings- The Real Return”. This report sheds some light on pension schemes as a whole and on the three pillars they are composed of and analyses their effective net performance and net costs.