Many industrialized countries are threatened with an aging society in the coming decades. However, how nations deal with this challenge differs. The Allianz Group examined pension systems worldwide for its Pension Report. These five countries are therefore best prepared for the future.
Aging population puts a strain on pension funds worldwide
According to the insurer Allianz, the number of pensioners will double worldwide in the next 30 years. Life expectancy is increasing, especially in the industrialized nations. On the other hand, the number of young people who pay into the pension fund falls as a result of the low birth rates. A development for which the majority of states are not sufficiently prepared, according to the Pension Report 2020 (external PDF link). For their study, the editors examined the pension systems of 70 countries and rated them from 1 (best value) to 7 (worst value). This was based on three parameters:
- financial and demographic situation
- sustainability of the pension system
- adequacy of living standards
The five best pension systems
- United States
Unsurprisingly, the wealthy western industrialized countries dominate the top spots in the ranking. With an overall rating of 3.04, the USA opens the top five. One of the reasons for this is probably the slightly lower proportion of the over 65-year-olds in the total population compared to Europe. The United States also scores well in the adequacy of living standards category.
- New Zealand
New Zealand scores even better here (1.9). The pension system of the fourth-placed secures a decent income for many seniors in particular. Overall, the island state is rated with a straight 3.
Older people in Denmark are generally well off financially. The state pays its citizens a standard pension, the so-called Folkepension (external link). In addition, many Danes are obliged to take out occupational pension schemes. This combination of private and state pensions secured Denmark third place in the ranking with 2.96 points.
The Belgians are also doing a lot of things right when it comes to retirement. Their system scores in the categories “Sustainability” and “Adequacy of standard of living” and thus achieves an overall score of 2.92.
Only Sweden protects its older citizens better. With 2.91, the Scandinavians take first place in the Pension Report’s top list. A special feature of the Swedish pension system is a state-managed provident fund. It enables the population to invest assets in the capital market at low cost.
This is how the German pension system performs
After all, three of the five best pension systems are in Europe. But how do the experts rate old-age provision in Germany? The Federal Republic only manages 26th place with 3.56 points. On the one hand, this is due to the demographic starting point (4.99). On the other hand, the study assesses the German pension system as not being adequately prepared for future challenges: In the “Sustainability” category, the report only rates Germany at 3.5.
It seems all the more important that Germans not only rely on the state pension, but also make private provisions. Financial service providers such as Swiss Life Select (external link) or MLP advise those who are undecided about the various options. The consumer advice centers (external link) also offer help and information on all aspects of old-age provision, as well as “Germany starts” (contact) specifically for founders.
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