A nurse assisting an elderly. LEHTIKUVA
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In the recent Global Pension Index comparison, Finland’s pension system has clinched the sixth position internationally. This marks the tenth consecutive time that the Nordic nation has garnered the top spot for the reliability and transparency of its pension administration.
The annual Mercer CFA Institute Global Index comparison showcased Finland’s position, which slipped by one rank from the previous year.
This year, the comparison included 47 countries. Finland’s slide was attributed to Australia’s rise, which garnered additional points for the financial sustainability of its pension system. “While Finland’s scores slightly dropped in its traditionally strong area of administrative reliability, many other nations experienced similar dips. This is a result of updates to Mercer’s indicators,” explained Mika Vidlund, the spokesperson for the Pension Security Center.
Despite these shifts, Finnish pension security was yet again heralded as the world’s most reliable and transparent. Factors such as effective regulatory mechanisms, clarity in customer communication, and reasonable administrative costs contributed to this recognition.
In a Nordic comparison, Finland stands behind Iceland and Denmark but surpasses its neighbors Sweden and Norway. “Iceland and Denmark lead in pension adequacy and financial durability. Sweden stands out only in sustainability, whereas Norway’s massive oil fund doesn’t grant it an advantage in financial sustainability as it’s also allocated to other public expenditures,” Vidlund summarized.
Mercer’s policy recommendations for all Nordic countries include considering pension rights during divorces. For Finland specifically, efforts to enhance household savings rates and reduce indebtedness are advised. The Global Pension Index also suggests augmenting funding and enhancing minimum pension security for the nation.
An important global trend highlighted in Mercer’s report pertains to demographic shifts. According to UN data, there are currently more individuals over 65 than there are children under six. This increasing proportion of older adults is exerting financial pressure on numerous countries’ pension systems.
Worldwide pension security also faces challenges from inflation, rapidly escalating interest rates, and investment risks due to geopolitical tensions. On a brighter note, Mercer identifies the potential of artificial intelligence to streamline decisions and risk management for pension investments.
About the Mercer Comparison:
The Mercer CFA Institute Global Pension Index assesses pension systems across countries considering adequacy, sustainability, and administrative reliability. Crafted by the global consulting firm Mercer, countries are scored on over 50 indicators. The overall scores are derived from a weighted average: adequacy (40%), sustainability (35%), and reliability (25%).
The 2023 comparison involved 47 countries, encompassing 64% of the global population. This year saw the inclusion of Botswana, Croatia, and Kazakhstan. The Global Pension Index has been published annually since 2009.
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Source: www.helsinkitimes.fi
