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FIAP > Boletín – Recientes > Pension Note No.78 / What has made the most developed voluntary pension systems worldwide successful? / January 2024
4 April, 2024

Pension Note No.78 / What has made the most developed voluntary pension systems worldwide successful? / January 2024

  • The Voluntary Pension Savings (VPS) mechanism is an alternative and indispensable means of improving the pensions of all workers. VPS certainly helps high-income workers achieve pensions more in line with their income, while improving the pensions of mid and low-income workers with less savings capacity, who are mostly not taxed on their wages, when state subsidies that encourage savings are in place.


  • A review of International VPS statistics shows that the 10 countries with the highest ratios of VPS vs GDP (above 20%) are Canada, the USA, the United Kingdom, Ireland, New Zealand, Belgium, Iceland, Japan, Brazil and Portugal. The top 7 countries in terms of VPS vs GDP rank in the top 22 places in the 2023 Mercer’s Global Pension Index, proving that the most robust pension systems worldwide have highly developed VPS programs.


  • This pension note analyses the VPSs of 6 selected countries (Canada, USA, United Kingdom, New Zealand, Iceland and Brazil), drawing conclusions regarding the factors that influenced their development. The review of the countries in question shows that:
  1. In general, the lower the replacement rates of mandatory systems (public PAYGO and/or private savings), the higher the VPS/GDP ratio. This is logical, since the lower the replacement rate of the mandatory system, the greater the challenge of the VPS to build pensions that approach a certain predefined sufficiency threshold (for example, 70% of average income over the entire working life).
  2. Replacement rates in PAYGO systems are expected to drop by 56.5% on average, between 2023 and 2100, due to population aging (in the absence of additional reforms, and in order to maintain a balance between income and expenditure). The mandatory and voluntary individual savings systems will therefore play a more important role in achieving the sufficiency objectives society expects from the pension systems.
  3. Basically, three types of public policies have been implemented to encourage VPS:
  4. Tax incentives
  5. State subsidies/credits for lower-income workers
  6. Non-tax/non-state incentives: this group basically comprises the following 4 policies: (i) Automatic enrollment in VPS plans; (ii) Liquidity/withdrawal for purposes other than retirement; (iii) Matching Contributions by the employer; and (iv) financial literacy.


  • Review more details about the factors behind the successful development of VPS plans worldwide by downloading the note here.
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