Preface 2011

In light of the consequence of ageing populations in virtually all countries and increasing government debt in many countries, retirement income systems are coming under greater scrutiny than ever before.  Notwithstanding the great diversity of policies towards pensions around the world, it is important that comparisons are made and lessons are learned from the range of approaches. This report presents such research and compares retirement income systems in 16 countries, representing more than half the world’s population.

Many of the challenges facing governments relating to ageing populations are similar, irrespective of their social, political, historical or economic influences. Furthermore, many of the desirable policy reforms to alleviate these challenges are also similar and relate to pension ages, the level of saving for retirement, encouraging people to work longer and some benefit design issues that can reduce leakage of benefits before retirement. In recent years some governments have made important decisions which have a positive effect on the country’s index value in this report. However in other cases, it has been more difficult, often due to the expectations of those in the workforce.

The immediate objective of this research is to benchmark each country’s retirement income against more than 40 indicators. An important secondary purpose is to highlight the shortcoming in each country’s system and to suggest possible areas of reform that would provide more adequate retirement benefits, increased sustainability over the longer term and/or a greater trust in the private pension system.

The preparation of this international report requires input, hard work and cooperation from many individuals and groups. I would like to thank them all.

First, we are delighted that the Victorian Government has agreed to continue to fund this project for another three years, on the basis that we add an extra two countries each year. This year, we have added India and Poland and we look forward to adding Denmark and Korea next year.

Second, Professor Deborah Ralston and her team at the Australian Centre for Financial Studies have played a pivotal role in this project, particularly in establishing an expert reference group of senior and experienced individuals who provided helpful suggestions and comments throughout the project.

Third, the Mercer consultants around the world have been invaluable in providing information in respect of their countries’ retirement income systems, checking our interpretation of the data, and providing insightful comments.

Naturally, we would value your feedback, suggestions and comments so that next year’s report will be of even greater value than this third index report. My hope is that you enjoy reading the report and that it provides new insights into the provision of financial security in retirement for our older citizens.

Dr David Knox
Senior Partner, Mercer