20. October 2021
Icelandic pension system ranks best in international survey
The Icelandic pension system ranks first in an international pension index compiled by the consulting firm Mercer and the CFA Institute, published this week. The comparison shows that the Icelandic pension system is more sustainable, delivers greater benefits and has more resources at its disposal than the pension systems of other countries, in addition to enjoying considerable trust compared with other systems. Among the explanations given for Iceland's top ranking on the index are the following:
- Good governance and regulation of pension funds within a system with strong features.
- Mutual insurance pension funds, which all wage earners belong to, with a high premium percentage. This results in substantial assets being set aside for the future.
- A relatively generous state pension (from the State Social Insurance Administration)
In the comparison, the Icelandic pension system scores 84.2 points out of a possible 100, followed by the Netherlands (83.5 points), Denmark (82.0), Israel (77.1) and Norway (75.2). Only Iceland, the Netherlands and Denmark score above 80 points and are thus considered to have strong pension systems that deliver good benefits, are sustainable and have a sound framework. The bottom three places on the list are held by Thailand (40.6), Argentina (41.5) and the Philippines (42.7). The findings nonetheless identify the following three factors that could further raise Iceland's pension index score:
- reducing household debt as a proportion of gross domestic product
- raising the pension age as life expectancy continues to increase
- reducing government debt as a proportion of gross domestic product
This comparison of pension systems is based partly on data from the Organisation for Economic Co-operation and Development (OECD) and other international institutions and databases, and partly on information gathered by specialists at Mercer and others in the countries concerned. The parties behind the agreement with the Mercer CFA Institute on Iceland's behalf are the National Association of Pension Funds, the Ministry of Finance and Economic Affairs, and the Central Bank of Iceland.
- Good governance and regulation of pension funds within a system with strong features.
- Mutual insurance pension funds, which all wage earners belong to, with a high premium percentage. This results in substantial assets being set aside for the future.
- A relatively generous state pension (from the State Social Insurance Administration)
- reducing household debt as a proportion of gross domestic product
- raising the pension age as life expectancy continues to increase
- reducing government debt as a proportion of gross domestic product
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