Global Pension Index 2010

This report represents research that compares fourteen different retirement income systems around the world, building on last year’s pilot study of eleven systems.

Last year’s report generated considerable discussion and controversy as any comparison of different system raises issues that are not straightforward or easy to compare. After all, there exist many approaches that have been affected by a range of social, political, historical, cultural and economic influences. Notwithstanding these differences, we believe that there are certain features or outcomes of retirement income systems that can be measured and typify strength and longer term sustainability.

There have been some changes to the indicators used in this year’s report as we have included a broader range of topics including:

• an assessment of the costs of the system
• the level of home ownership
• actual asset allocation
• the effect that divorce can have on providing an adequate benefit.

The overall index value for each country takes into account more than forty indicators which are scored from objective data or assessments. Of course, the weighting of each indicator can be debated but we have given greater weight to the more important factors. Nevertheless we recognise that each country’s index value would move with a change in weighting. For this reason, one cannot be definite and state that one country’s system is better than another when the difference is small, say 0.5 in the overall index value. However, when there is a difference of say, five or more we can state that the higher index value indicates that this country has a system that provides more adequate benefits, is more sustainable and/or has greater integrity than the other country.