As a newcomer at Australian Mercer Global Pension Index Denmark not just takes the first place removing Netherlands from the top position, but also gets an A rating as the first country ever scoring 82.9 points. Sweden has to settle with a B rating scoring 73.4 points. Singapore gets a C rating with 54.8 point which is 1.9 less than in 2011 and China are in the bottom of the 18 rated countries with a D rating and 45.4 points.
Denmark’s unique ‘A’ grade ranking has been awarded in recognition of the country’s well funded pension system, its high level of assets and contributions, the provision of adequate benefits and a private pension system with well developed regulations, the reports says.
“Many of the world’s retirement systems are under increasing stress with an ageing population, low investment returns and, in some cases, significant government debt. Reform is needed to ensure that adequate benefits are provided over the long term in a sustainable manner,” says Dr David Knox, Senior Partner at Mercer and author of the report.
Dr Knox also commented on this year’s special chapter on the asset allocation of pension funds around the world. He noted that the exposure to growth assets (which includes equities and property) ranges from virtually zero in some countries to more than 70 percent in Australia.
“There is no single answer to the best asset allocation for every country. However, a diverse range of assets across the system is likely to provide a better outcome than heavy concentration in bonds or equities.”
Even Denmark score an A, Mercer suggest it could be improved by raising the household savings, better protection of both parties in a divorce and increasing the labour force participation rate amongst older workers.
The Index is now in its fourth year and has grown from 11 to 18 countries, and covers over half of the world’s population.