Best Pension System in the World
It would not be a fallacy to say that Pension is someone’s best partner in old age, especially when they have left major portion of life and people behind. A pension is a kind of monthly income to retired government or company employees and is often employer sponsored. There are two kinds of pension plans, which are defined-benefit plans and defined-contribution plans. Talking worldwide, the system and kind of pension provided to any individual depends from country to country.
The basis of scoring best pension system in the world
As per experts, the pension index of any country is calculated using the weighted average of three sub-indices, which are Adequacy sub-index, Integrity sub-index and Sustainability sub-index. The adequacy sub-index is calculated on how a country’s pension system enhances the lives of poor and median-income earners along with the system’s efficacy. Integrity sub-index examines communication, governance, regulations and costs, whereas, the sustainability sub-index considers factors that can affect how sustainable a country’s retirement fund is. The index value of each country is measured on a scale of 0 to 100, based on all the above three sub-indices.
Countries having best pension system for 2013
DENMARK holds the highest position in the world when it comes to best pension system, with an index value of 80.2. It has a public basic pension scheme, which is tied to income that is fully funded defined-contribution plan and compulsory occupation scheme. It holds its first position due to raised household savings, increased workforce participation among older workers and introduction of measures to protect in the event of fraud, provider solvency and mismanagement.
Denmark is closely followed by NETHERLANDS with an index value of 78.3, which uses a flat-rate public pension and a semi-compulsory occupational pension linked to earnings and industrial agreements. Almost every employee in Netherlands is a member of these occupational plans. The countries with 3rd, 4th and 5th best pension system are AUSTRALIA, SWITZERLAND and SWEDEN respectively with UK at 9th position, USA at 11th and INDIA at 19th position.