In this note we highlight:

• Mercer’s 2023 Global Pension Index assesses the pension systems of 47 countries, with the Netherlands, Iceland and Denmark being the best rated, and India, the Philippines and Argentina, the worst.

• Due to the effect of demographic pressures on the PAYGO systems, many governments of countries with these systems will have to face the challenge of reducing pension amounts or modifying key parameters, making it difficult to access a pension. Hence, the PAYGO systems have been increasingly complemented or replaced by individual savings mechanisms, especially in the countries best assessed by the index. The three best rated countries, the Netherlands, Iceland and Denmark, have individually funded savings of more than twice their GDP.

• Among Latin America countries, Chile ranks 14th with 69.9 points out of a possible 100 (index value), Uruguay ranks 15th with 68.9 points, Colombia 24th with 61.9 points, Brazil 33rd with 55.7 points, Peru 34th with 55.5 points, Mexico 36th with 55.1 points, and Argentina last (47th) with 42.3 points.

• The 2023 Mercer Report’s main suggestions to the countries of the region focus mainly on: increasing the minimum level of support for the poorest people; increasing the retirement age to reflect the increase in life expectancy and encouraging both mandatory and voluntary private savings.

• The report also analyzes the impact that Artificial Intelligence (AI) could have on pension systems. Since AI gives Fund Managers the ability to analyze large amounts of data, it can help them identify a greater number of investment opportunities, resulting in higher long-term returns and lower volatility.