- Melbourne Mercer Global Pension Index 2010 expanded to include Brazil, France and Switzerland
- Netherlands continues to be ranked in first position
- No country in the index classed as having an A-grade system (score above 80)
TORONTO, Oct. 20 /CNW/ - The second Melbourne Mercer Global Pension Index, produced by Mercer for the Australian Centre for Financial Studies compares pension systems from around the world and ranks them based on adequacy, sustainability and integrity. The Index was expanded to cover 14 countries, with the addition of Brazil, France and Switzerland.
For the second year in a row, the Netherlands obtained top ranking in the Melbourne Mercer Global Pension Index. While its index value increased from 76.1 in 2009 to 78.3 in 2010, an A-grade classification again eluded the Netherlands.
Newcomer Switzerland was ranked second with a score of 75.3, followed by Sweden third with a score of 74.5 and Australia in fourth position with a score of 72.9.
Canada also maintained its B-grade classification, ranking fifth with a score of 69.9, ahead of the US, UK and France.
Mercer Partner, Scott Clausen, said that there are several areas in the Canadian system that could be addressed to rank even higher.
The report recommended that Canada's system could be improved by:
- increasing the coverage of employees in occupational pension plans, possibly through a more efficient system
- ensuring that voluntary retirement savings are preserved for retirement purposes
- introducing a mechanism to increase the government pension age of 65 as life expectancy continues to increase
- increasing the level of household savings
Clausen adds that "Public policy makers should continue their focus on increasing pension plan coverage for middle income employees in the private sector." Currently, the Canadian Finance Ministers are analyzing two options to reform the Canadian Pension system: a modest expansion of the Canada Pension Plan (CPP) and an efficient private-sector solution.
Dr David Knox, a Senior Partner in Mercer's Retirement, Risk and Finance business, who oversaw the study, said the changes in this year's index were characterised by global trends and events such as the impact of the global financial crisis (GFC) and increasing life expectancy.
"Not surprisingly, the GFC has threatened the sustainability of public and private pension systems in several countries through the decline in asset values and an increase in government debt. This was reflected most acutely in the scores for Canada, the United Kingdom and the United States.
"Increased life expectancy is a theme that is common to all of the countries in the index. As the gap between pension age and life expectancy widens, pressure on public pension systems will increase. This highlights the need for governments to continue to review their state pension or retirement age and focus on increasing the adequacy of the private system."
Professor Deborah Ralston, Director of the Australian Centre for Financial Studies said the Index had already demonstrated its value to government, industry and academia.
"The Mercer Melbourne Global Pension Index has already made a meaningful contribution to the debate on how to best provide for the ageing population and the need to achieve a balance between adequacy and the cost of retirement income systems. With this second edition, the 2010 Index will offer even greater insight into this complex discussion, with the inclusion of new countries and broader terms of reference."
The Melbourne Mercer Global Pension Index is based on more than 40 indicators which reflect features that are desirable in all retirement income systems. These indicators are grouped into three sub-indices: adequacy, sustainability and integrity.
In this year's study four new variables were included in the calculation of the Index to assess: the costs of each country's system; the level of home ownership; asset allocation; and the effect of divorce on the provision of retirement benefits.
Melbourne Mercer Global Pension Index 2010
| Country | Ranking | Overall index value |
Sub-index values | |||
| 2010 | 2009 | Adequacy | Sustainability | Integrity | ||
| 40% | 35% | 25% | ||||
| Netherlands | 1 | 1 | 78.3 | 76.1 | 71.6 | 91.4 |
| Switzerland | 2 | - | 75.3 | 73.1 | 71.8 | 83.5 |
| Sweden | 3 | 3 | 74.5 | 72.8 | 72.9 | 79.5 |
| Australia | 4 | 2 | 72.9 | 68.1 | 71.7 | 82.4 |
| Canada | 5 | 4 | 69.9 | 75.0 | 56.8 | 80.1 |
| UK | 6 | 5 | 63.7 | 64.9 | 47.1 | 85.3 |
| Chile | 7 | 7 | 59.9 | 52.1 | 54.7 | 79.8 |
| Brazil | 8 | - | 59.8 | 72.9 | 29.1 | 81.7 |
| Singapore | 9 | 8 | 59.6 | 43.7 | 63.6 | 79.5 |
| USA | 10 | 6 | 57.3 | 54.3 | 59.0 | 60.0 |
| France | 11 | - | 54.6 | 74.9 | 29.7 | 56.8 |
| Germany | 12 | 9 | 54.0 | 64.1 | 42.3 | 54.4 |
| Japan | 13 | 11 | 42.9 | 42.2 | 27.9 | 65.2 |
| China | 14 | 10 | 40.3 | 48.3 | 29.0 | 43.4 |
| Average | 61.7 | 63.1 | 51.9 | 73.1 | ||
About Mercer
Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer's investment services include investment consulting and multi-manager investment management. Mercer's 18,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.ca.
About the Australian Centre for Financial Studies
The Australian Centre for Financial Studies (ACFS), formerly the Melbourne Centre for Financial Studies, is a not-for-profit consortium of Monash University, RMIT University, the University of Melbourne and Finsia (Financial Services Institute of Australasia) which was established in 2005 with seed funding from the Victorian Government. Funding for ACFS is also derived from corporate sponsorship and through research partnerships such as the one with Mercer which has led to this report.
The mission of the ACFS is to build links between academics, practitioners and government in the finance community to enhance research, practice, education and the reputation of Australia's financial institutions and universities, and of Australia as a financial centre.
For further information:
Elizabeth R. Barry
416 868 2834 / [email protected]
Mary Warner
416 413 4761 / [email protected]
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