The Icelandic pension system (84.7 points) was once again brought together in the fourteenth annual report of the Association of United States CFA Global Pension Index, with the Netherlands (84.6 points) and Denmark (82) ranked second and third respectively. In Asia, Singapore’s pension system continued to be the first, ranking 9 in 44 countries and territories. Hong Kong Special Administrative Region of China and Malaysia ranked second and third in Asia, with global rankings of 19 and 23 respectively.
CFA’s Global Pension Index Report provides a comprehensive study of pension systems in 44 countries and regions of the world, covering 65 per cent of the global population. Based on the pension system around the globe, the report highlights some of the shortcomings of the systems and proposes potential areas of reform to support more adequate and sustainable pension benefits.
The Global Pension Index Report of the Association of the United States of America, 2022, measures pension systems using three classification indices of sustainability, adequacy and integrity, and Portugal is a new member in the list. This year, the United States also undertook a thorough review of the rating criteria in order to enhance the integrity of the rating criteria and eliminate possible unintentional biases.
In Asia, Malaysia (63.1 points) and Japan (54.5 points) are the two most advanced countries, from Level C to Level C+, and from Level D to Level C in 2021. In addition to the revision of the scoring standards, the increase in Malaysia’s ratings has been largely due to a higher net substitution rate, while Japan has benefited from adjustments in pension scheme management. The Republic of Korea (51.1 points) was also upgraded to Level C, while the Hong Kong Special Administrative Region of China (64.7 points), India (44.4 points) and Taiwan of China (52.9 points) increased in comparison to the previous year. Thailand (41.7) remains the lowest global index but is making steady progress. (For more detailed information on different systems in countries and regions of Asia, see appendix. (b) The situation in the Democratic Republic of the Congo;
Despite some progress over the years, the Asian pension system is still lagging behind the world — the world — The region’s average combined index is 53.8, below the global average of 63.
Changes to the contributory (DC) scheme have increased uncertainty among retirees
Since employers no longer provide financial security for the defined benefit (DB) scheme, risks and opportunities before and after retirement will be borne by individuals. Payment of a flat pension at the time of retirement of an individual Differently, contributory defined schemes typically provide the accumulated amounts in individual accounts when individuals retire. In addition, many Governments are considering making more effective use of government budgets to generate broader economic impact and may affect the level of social welfare in order to ensure the sustainability of long-term national finance.
As a result, the economic sources of many people after retirement are more vulnerable to potential disadvantages. Therefore, in order to maximize the time value of money, it is necessary for individuals to make sound financial decisions at the accumulation and extraction stages. Just as diversity is a key element of all investment schemes, individuals can also seek the diversification of pension savings, including regular income, appropriate security mechanisms and access to financing, as well as different economic sources such as government, private pensions and individual savings.
Data interpretation
The CFA Global Pension Index Report uses a weighted average of three classification indices of adequacy, sustainability and completeness. In terms of adequacy, the maximum and minimum value of the Asian pension system is Singapore (77.3 points) and India (37.6 points), respectively, taking into account the benefits provided to the poor and the various types of income, as well as a number of design features and features that enhance the effectiveness of the overall pension system.
In Asia, Singapore has the highest sustainability classification index (65.4). The sustainability classification index takes into account a number of indicators that affect the long-term sustainability of the current system, such as the labour force participation rate of the elderly population and the level of real economic growth. Thailand has the lowest score (36.4 points).
In terms of integrity, Hong Kong, China, has the highest score (87.6 points); and the Philippines has the lowest pension system (30.0 points), both in Asia and globally. The completeness classification index takes into account three major aspects of the pension system, namely regulation and governance, participant protection and communication of information, and operating costs.
In comparison with 2021, the country has shown the greatest improvement as a result of pension reform, not only in terms of individual benefits but also in terms of pension regulations.