Singapore Joins Elite Group in Global Pension Rankings as Netherlands Maintains Top Position

Singapore has achieved a significant milestone by entering the top tier of the annual global pension index for the first time, while the Netherlands maintained its position at the number one spot.

The Mercer CFA Institute Global Pension Index, released on Wednesday, places Iceland, Denmark, and Israel alongside Singapore and the Netherlands in the elite group of countries awarded an A rating. This comprehensive assessment evaluates 52 retirement systems worldwide based on their adequacy, sustainability, and integrity.

According to Tim Jenkins, the report's lead author and a Mercer partner in Sydney, Singapore has consistently enhanced its pension system over time, elevating its global standing. Recent efforts have focused particularly on improving transparency, ensuring citizens better understand their expected retirement benefits.

Singapore's pension system revolves around the Central Provident Fund, which mandates contributions from both workers and employers, covering all employed citizens and permanent residents. The city-state's remarkable progress is evident in its rating improvement from a C grade in 2009 to an A grade in the current index.

"Singapore has gone all the way from C-grade to A-grade," Jenkins noted. "The economy in Singapore has also helped," he added, explaining that the index's sustainability metric incorporates long-term economic growth factors.

In the current rankings, the United States placed 30th, the United Kingdom secured the 12th position, and Japan ranked 39th. India received the lowest ranking with a D rating, behind Argentina, the Philippines, and Turkey, which were also assigned D ratings. Australia, despite its globally respected pension system, dropped one place to seventh position, now ranking below Sweden.

The report authors cautioned about an emerging trend amid rising global uncertainty: governments increasingly attempting to direct pension funds' capital toward national priorities.

"Regulations and government actions - from tax policies to investment mandates - profoundly shape how pension funds can allocate capital," stated Margaret Franklin, president and chief executive officer of the CFA Institute.

She emphasized, "As some systems look to pension funds to drive investments that are considered in the national interest, the professional investment community must guard against the unintended consequences that may arise when mandates or restrictions distort the system."