How was it calculated in 2011?

The overall index value for each country represents the weighted average of the three sub-indices. The weightings used are:

• 40 percent for the adequacy sub-index
• 35 percent for the sustainability sub-index
• 25 percent for the integrity sub-index

The different weightings are used to reflect the primary importance of the adequacy sub-index which represents the benefits that are currently being provided together with some important benefit design features. The sustainability sub-index has a focus on the future and measures various indicators which will influence the likelihood that the current system will be able to be maintained in the future. The integrity sub-index has a focus on the private sector system and therefore has a more restrictive scope than the other two sub-indices.

The following diagram presents a high-level summary of the index.

The final chapter of the report makes several suggestions to improve each country’s retirement income system. Although each system reflects a unique history, there are some common themes as many countries face similar problems in the decades ahead.

These common challenges include:

• Increasing the state pension age and/or retirement age to reflect increasing life expectancy, both now and in the future
• Promoting higher labour force participation at older ages, particularly as many individuals now remain in good health for longer periods
• Encouraging (or requiring) higher levels of saving, both within the pension system and beyond it
• Increasing the coverage of employees in the private pension system, where it continues to be voluntary
• Reducing the leakage from the retirement savings system prior to an individual’s retirement
• Promoting greater diversity in the provision of retirement income, whilst also requiring that a least a portion of the accumulated benefit be taken as income