Retirement income systems perform a critical role for both individuals and societies as most countries grapple with the social and economic effects of ageing populations. Yet, as the OECD (2009b) notes: “classifying pension systems and different retirement income schemes is difficult.”
Furthermore, comparing retirement income systems is certain to be controversial as every system is different and has arisen from each country’s particular economic, social, cultural, political and historical circumstances. There is no perfect system that can be applied universally around the world. However there are certain features and characteristics of retirement income systems that are likely to lead to improved benefits, an increased likelihood of future sustainability of the system, and a greater level of confidence and trust within the community.
This pilot study of eleven countries has confirmed that no system is perfect. Indeed no country’s system has an index value above 80, which we consider represents an A-grade retirement income system. However, several countries have an index value between 65 and 80, which represents a B-grade system and – with some adjustments or improvements – these countries could be re-classified as A-grade systems. (The changes that would raise these systems to the A-grade level are discussed in Chapter 6.)
We believe that none of the countries in this pilot study has an E-grade system, which would be represented by an index value below 35. A score between 35 and 50, which represents a D-grade system, indicates a system that has some sound features but where there exist major omissions or weaknesses. A D-grade classification may also occur in the relatively early stages of the development of a particular country’s system.