• The 2021 Mercer World Pension Index evaluates the pension systems of 43 countries, with Iceland, the Netherlands and Denmark being the best rated, and the Philippines, Argentina, and Thailand the worst.

• The Icelandic system is at the forefront, having a unique combination of public and private pensions, the latter with high coverage and contribution rates, so that even those workers with half the average salary receive a pension, with 71% coming from the private individually funded system.

• The results for Latin American countries show that pensions are still a major challenge in the region. Chile ranks 16th with 67 points out of a possible 100 (index value); Uruguay ranks 20th with 60.7 points; Colombia 25th with 58.4 points; Peru 29th with 55 points; Brazil 30th with 54.7 points; Mexico 37th with 49 points; and Argentina 42nd with 41.5 points.

• Although Chile and Peru have allowed multiple fund withdrawals, reducing savings and pension amounts, Mexico has taken measures that seek to increase savings, such as the gradual increase in the contribution rate to the individual accounts system. This has resulted in an increase in Mexico’s ranking, from 44.7 to 49 points between 2020 and 2021, contrary to what happened in the case of Chile and Peru.
• The importance of private individually funded savings in the Mercer index ranking should be noted. Iceland, the Netherlands, and Denmark, the top three ranked countries, have savings from the funded system of more than 150% of their GDP. Pension systems such as those of Japan and Korea, on the other hand, are mainly PAYGO, so they have low levels of funded savings. These countries have a low index value.

To review the full pensions note, click here.