The Integrity Sub-Index 2011

The integrity sub-index is determined by considering three broad areas of the private sector pension system, namely: regulation and governance, protection for members and costs. As this sub-index is only concerned with the private sector pension plans (i.e. Pillars 2 and 3 of the five-pillar World Bank model), it has a more restricted scope than the previous two sub-indices. The private sector pillars are, however, critical because without them the government becomes the only provider, which is not a desirable or sustainable long-term outcome. A sound and well regulated private sector pension system, which has the confidence of the community, represents an important component of retirement income systems in the future.

The country with the highest value for the integrity sub-index is the Netherlands (91.4), with the lowest value being for China (50.1). As noted above, this sub-index covers three broad areas affecting private sector pension plans and the better scores were achieved by countries with well developed private pension industries.

In each of the three broad areas, several questions have been asked to ascertain the requirements that apply to private sector pension plans in each country.

To read the complete Integrity Sub-Index, please refer to page 39 of the Melbourne Mercer Global Pension Index for 2011.