Traditional pensions began to fade in the U.S. during the 1980s after rule changes from the Internal Revenue Service. But private pensions still exist here, and most workers will be entitled to Social Security benefits from the government — so long as that program’s funding holds out.
So how does our system of retirement benefits stack up to those of nations around the world?
Consulting firm Mercer recently released the Mercer CFA Institute Global Pension Index for 2024, which highlights countries with the best pension systems. Mercer analyzed the adequacy, sustainability and integrity of pension systems around the globe. The analysis covers public and private retirement systems.
Money Talks News compiled a list of the top countries, each of which received a score of at least 70 on a 100-point scale. The U.S., however, doesn’t make this list. We landed in 29th place with a score of 60.4, a C+ grade.
Let’s see which countries have us beat.
1. Netherlands
Overall pension index score: 84.8
Pension index grade: A
The Dutch pension system consists of benefits granted by the General Old Age Pensions Act, supplementary pensions from employers and supplementary individual pension policies.
Those older than 67 are eligible for the government’s old-age pension, which is designed to provide enough income for recipients to get by on. Supplementary pensions are just that, with 90% of employers providing additional income to their retired workers. The individual policies of the Dutch system include annuities, single premium policies and life insurance policies.
2. Iceland
Overall pension index score: 83.4
Pension index grade: A
Certain Icelanders are eligible for the old-age pension provided by the county’s social security system. Anyone over the age of 65 who has lived in the country for a minimum of three years between 16 and 67 years of age is entitled to at least a partial pension.
For full old-age pension entitlement, one must have lived in Iceland for at least 40 years. However, those years don’t have to be consecutive.
3. Denmark
Overall pension index score: 81.6
Pension index grade: A
Any resident within three years of Denmark’s official retirement age — between 65 and 69 depending on birth year — may be eligible to receive early benefits from the country’s old-age pension. The public old age pension isn’t the only a life-long benefit available to residents. They may also be eligible for a supplementary pension benefit.
4. Israel
Overall pension index score: 80.2
Pension index grade: A
Any natural-born Israeli resident is eligible for old age insurance benefits, as are some men who immigrated to the country before the age of 62 and some women who immigrated before reaching the official retirement age — 60 to 65, depending on birth year. They just have to meet some other requirements as well, such as passing an income test.
Those who arrived after age 62 may still be eligible for a special old-age benefit.
5. Singapore
Overall pension index score: 78.7
Pension index grade: B+
Singapore has two main components to its pension system: the compulsory Central Provident Fund (which is the primary pillar) and the voluntary Supplementary Retirement Scheme (SRS). Singaporean citizens and permanent residents are eligible for Singapore’s public pensions.
The SRS is available for foreigners living in Singapore, regardless of whether they’re an official resident.
6. Australia
Overall pension index score: 76.7
Pension index grade: B+
The retirement system in Australia includes a taxpayer-funded age pension, private pensions with employer contributions and personal retirement savings accounts.
Age eligibility for government age pensions ranges from about 65 to 67, depending on birth year. Recipients must also be Australia residents for at least 10 years, and five of those years must happen in one period, not sporadically.
7. Finland
Overall pension index score: 75.9
Pension index grade: B+
The Finnish pension system is made up of a statutory earnings-related pension and a national pension. All senior citizens are guaranteed a minimum pension amount. Entrepreneurs and employees working in the country get the statutory earnings-related pension. Residents who haven’t worked or whose statutory earnings-related pension is small receive the national pension.
8. Norway
Overall pension index score: 75.2
Pension index grade: B+
Norway’s pension system has an old and a new version. The old version applies for those born before 1954, and the new system is for those born after 1962. Those born between 1954 and 1962 are subject to a blended system that contains elements of the old and new versions.
The new retirement pension system includes both a guarantee pension and an earnings-related pension. To qualify for the full guarantee pension, one must have been a member of the state’s National Insurance Scheme for at least 40 years.
9. Chile
Overall pension index score: 74.9
Pension index grade: B
Chile’s pension system is being eyed for an overhaul, but as is, its Mercer’s Index score went up by 5 points. That’s primarily because of its increases in the targeted pension and net replacement rates.
10. Sweden
Overall pension index score: 74.3
Pension index grade: B
Sweden’s citizens can retire with a public pension, an occupational pension and a private pension. The public pension is decided based on pensionable income. Typically, a higher salary in working years means a higher pension amount during retirement. There is, however, a limit — 7.5 times the base pension income amount, which is determined on a yearly basis.
11. United Kingdom
Overall pension index score: 71.6
Pension index grade: B
The U.K.’s new state pension system is available to men born on or after April 6, 1951, and women born on or after April 6, 1953. Older workers are entitled to a basic state pension offered under a previous system. Under the new system, workers must have 10 qualifying years on their National Insurance record and reach the state pension age to receive benefits.
Although the U.K. has a solid B rating from Mercer, its score has actually decreased from 2023, when its score was 73. The dip is mostly a result of the decrease in net pension replacement rates and the level of pension assets, Mercer reports.
12. Switzerland
Overall pension index score: 71.5
Pension index grade: B
Switzerland has a pension system with three pillars: a state pension, an occupational pension and a private pension. The state pension can include both an old-age pension and supplementary benefits.
The old-age pension is paid to recipients once they reach retirement age — 65 for men and 64 for women. Recipients must have made at least one full year of contributions to be eligible. The old-age pension under the occupational benefit plan is based on annual salary and insurance coverage.
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