The overall index value of a particular country’s retirement income system will not remain static from year to year. There will be global economic influences that may affect asset values and/or government debt; legislative change or new data that will affect a particular country; and the introduction of new indicators together with some slight revisions to other indicators which enable the index to obtain a more omprehensive and consistent assessment than occurred in the 2009 pilot study.
Global influences The provision of financial security in retirement represents a complex and dynamic set of inter-related global and local factors. Some move relatively slowly, such as demographic change, whereas others have a more immediate impact due to local political decisions or a global event. The Global Financial Crisis represents one such example.
However this crisis did not have the same effect on retirement income systems in every country. While the value of assets supporting pension liabilities reduced significantly in some countries, this impact was not uniform as its effect depended on the asset allocation in each country. Similarly, there was a material increase in government debt in some countries but again, this was not universal.
The impact of the global financial crisis was most evident in declines of the sustainability sub-index for Canada, the United Kingdom and the United States through declines in asset values in 2008 and increases in government debt. However the full impact of the crisis has not yet shown up in the index values due to the lags in obtaining comparable data for every country. A further decrease in the sustainability sub-index value for these countries may be expected in future years.
A second global factor that has affected many countries is the ongoing increase in life expectancies as reported by the United Nations. These changes increase the difference between the state pension age and life expectancy which, in turn, increases the expected number of years in retirement. It highlights the need for overnments to continue to review their state pension or retirement age.