The retirement systems of the Netherlands, Iceland, Denmark and Israel were once again named the top four systems worldwide, according to the 2025 Mercer CFA Institute Global Pension Index. The same four topped Mercer’s 2024 report.
For the first time in the 17-year history of the index, Singapore’s retirement system also received an A, the only country in Asia to achieve a rating at that level and the No. 5 system overall.
A-grade countries offer a “robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity,” according to the report.
The annual study benchmarked and compared the retirement systems of 52 countries—representing 65% of the world’s population—with a secondary purpose of highlighting shortcomings in each system and suggesting areas of reform for each.
Each country was scored according to three metrics, based on the characteristics listed:
Adequacy (40% weight): benefits, government support, growth assets, home ownership, savings and system design; Sustainability (35% weight): demographics; economic growth; government debt; pension coverage; public expenditure; and total assets; and Integrity (25% weight): communication; governance, operating costs, protection and regulation.
The Netherlands had the highest overall score (85.4). Iceland, No. 2 on the list, had a total score of 84 and the highest sustainability score (85.7). Denmark, ranked third, had an overall score of 82.3. Kuwait, with a score of 71.9, had the highest adequacy score at 86.6. Finland, with a total score of 76.6, had the highest integrity score at 90.6.
The U.S. ranked 30th out of 52 with a total score of 61.1, an adequacy score of 64.1, a sustainability score of 59.9 and an integrity score of 58. This reflects a one-rank drop from last year’s report and a 0.7-point overall score increase.
Eight retirement systems improved their index grade this year, and no systems were downgraded. Overall score improvement stems from people living longer and birth rates continuing to decline, according to the report.
Balancing Interests
Heightened geopolitical and economic uncertainty are reshaping the global retirement landscape, the report noted. Governments exert influence on—and in some cases restrict—private pension funds’ investments. As a result, Mercer suggested eight principles to strike a balance between acting in the best interest of plan participants and acting in a broader national interest:
Retirement first: The primary purpose of a pension fund is to provide retirement income to the fund’s participants and dependents; Fiduciary integrity: Fiduciaries must act in the best interest of the fund’s beneficiaries; Robust governance: Pension legislation should require all funds to develop a comprehensive investment policy that is then followed; Full market access: Funds should consider the full range of investment opportunities appropriate for their size and complexity; Policy incentives, not mandates: Governments can make particular investments attractive to funds without using compulsion or requiring a “floor” level of investment in a particular asset class; Collaborative scale: Funds should collaborate with each other and with the governments to increase investment opportunities where they may not otherwise have the scale or risk appetite on their own; Transparency, not constraints: There should be transparent public discourse related to investments and their returns and risks, but no performance tests or fee caps should be applied to the investments; and Macro awareness: When fund assets are a significant share of GDP, governments must recognize the impact and interactions between their fiscal and social policies and the implications for current and future retirees.
“Regulations and government actions — from tax policies to investment mandates — profoundly shape how pension funds can allocate capital,” said Margaret Franklin, the CFA Institute’s president and CEO, in a statement. “As some systems look to pension funds to drive investments that are considered in the national interest, the professional investment community must guard against the unintended consequences that may arise when mandates or restrictions distort the system.”
Rankings
The rankings were based on the total index value. Grade-A systems had an index value of greater than 80, B+ systems had an index value ranging from 76 through 80, B-rated systems scored from 66 through 75, C+ systems from 61 through 65, C systems from 51 through 60, and D systems from 35 through 50. E systems were those with an index value less than 35, although no country scored so low.
Sweden (78.2), Australia (77.6), Chile (76.6), Finland (76.6) and Norway (76) earned B+ scores. Switzerland (72.4), the U.K. (72.2), Kuwait (71.9), Uruguay (71.1) and Hong Kong (70.6) were among the countries that earned scores of B. Countries graded as B+ or B were identified as having retirement systems with a sound structure and “many good features,” but they also have improvement needs that differentiate them from A-grade systems.
The UAE (64.9), Spain (63.8), Colombia (62.5), the US (61.1), Oman (60.9) and Malaysia (60.6) earned C+ grades. Botswana (59.8), Namibia (59.1), Panama (59.1), Poland (57) and Italy (57) were among the countries with a C grade. C+ and C retirement systems were described as having some good features, but also some major risks or shortcomings to be addressed.
Turkey (48.2), the Philippines (47.1), Argentina (45.9) and India (43.8) received D grades as countries with systems that have some desirable features, but also major weaknesses or omissions that need to be addressed.
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Tags: CFA Institue, Mercer, Mercer CFA Institute Global Pension Index