Go ahead and shut your shop down, sir. Denmark has the best pension system in the world. Photo: Mads Nissen/Scanpix
Denmark has the best pension system in the world, according to the Melbourne Mercer Global Pension Index (MMGPI) released on Monday.
In the study, which looked at the pension systems of 25 countries, Denmark was the only nation to receive an ‘A’ grade, signifying “a first class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity.” Following Denmark, with a ‘B+’ grade, were Australia and the Netherlands.
It was the third year in a row that Denmark topped the list, and according to the MMGPI, Denmark increased its lead on other countries slightly since the last survey based on factors including a higher savings rate.
“Denmark’s retirement income system comprises a public basic pension scheme, a means-tested supplementary pension benefit, a fully funded contributions scheme and mandatory occupational schemes,” the report reads.
Despite Denmark’s top placing on the list, the MMGPI suggests that the country’s pension system could be further improved by raising the level of household savings, increasing the labour force participation rate at older ages and introducing protections for both parties in a divorce.
Accounting for Danes’ longer life expectancies, the retirement age for the public pension scheme (folkepension) will be raised in tiers. While some Danes are still retiring at age 65, the folkepension age was raised to 67 for those born in 1955 and later. For Danes born after December 31, 1962, the pension age will rise to 68 in 2030 and 69 in 2035.
In another recent international study, HelpAge International's Global AgeWatch Index ranked Denmark as the 12th best country to grow old.