The Sustainability Sub-Index 2010

The sustainability subindex is determined by considering a number of indicators which influence the long-term sustainability of the current system. These include measuring the importance of the private pension system, the length of expected retirement both now and in the future, the labour force participation rate of older workers and the current level of government debt (12).

(12 The application of means tests in respect of state pensions also represents an important component of the longterm financial sustainability for many systems. However, the measurement of the financial effect of means testing is problematic and its application varies considerably between countries. It was therefore excluded from this sub-index.)

The countries with the highest value for the sustainability sub-index are Sweden (72.9) and Switzerland (71.8), with the lowest values being for Japan (27.9), China (29.0) and Brazil (29.1).

Whilst several indicators influence these scores, the level of coverage of private pension plans, the level of pension assets as a proportion of GDP and the projected demographic factors tend to be the most important. Full details of the values in respect
of each indicator in the sustainability sub-index are shown in Attachment 2 of the Index.

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