Countries With the Best Pension Systems (2025)

A pension system decides whether people can stop working without falling into poverty, and whether workers can trust that the money they pay in will still mean something in 40 years. The most widely cited yardstick is the Mercer CFA Institute Global Pension Index, which scored 52 retirement income systems in its 2025 edition. The Netherlands, Iceland, and Denmark came out on top, with Singapore and Israel also earning an A. This article lays out the full scores, explains what separates the leaders from the pack, and shows where the index can mislead.

Key takeaways

• Five systems earned an A in the 2025 edition: the Netherlands (85.4), Iceland (84.0), Denmark (82.3), Singapore (80.8), and Israel (80.3). Singapore received an A for the first time in the index's 17-year history.
• The index weights three things: adequacy (40%), sustainability (35%), and integrity (25%). A system can score high on one and low on another.
• Several European pay-as-you-go systems pay generous benefits but score badly on sustainability. Italy's sustainability score is 27.9 and Austria's is 24.0.
• The United States scored 61.1 (grade C+), ranking 30th of 52.
• A high rank describes the design of a system, not the living standard of any one retiree.

Top pension systems in the world: the 2025 scores

The 2025 edition of the Mercer CFA Institute Global Pension Index was released on October 15, 2025, and covers 52 systems that together represent 65% of the world's population. Four countries joined that year: Kuwait, Namibia, Oman, and Panama. Scores run from 0 to 100, and a grade of A requires an overall value above 80.

The table below reproduces the top 20 plus a handful of well-known systems further down. The first sub-index is adequacy (how well benefits replace income and protect against poverty), the second is sustainability (whether the system can keep paying as the population ages), and the third is integrity (regulation, governance, communication, and costs).

Rank	System	Grade	Overall	Adequacy	Sustainability	Integrity
1	Netherlands	A	85.4	86.1	83.5	86.8
2	Iceland	A	84.0	83.0	85.7	83.3
3	Denmark	A	82.3	82.9	85.0	77.6
4	Singapore	A	80.8	79.4	75.5	90.4
5	Israel	A	80.3	75.6	83.2	83.6
6	Sweden	B+	78.2	76.8	76.3	83.0
7	Australia	B+	77.6	69.0	81.1	86.4
8	Chile	B+	76.6	71.9	74.9	86.6
9	Finland	B+	76.6	77.4	65.6	90.6
10	Norway	B+	76.0	77.8	65.2	88.4
11	Switzerland	B	72.4	66.3	72.9	81.6
12	United Kingdom	B	72.2	75.9	63.2	79.0
13	Kuwait	B	71.9	86.6	65.4	57.6
14	Uruguay	B	71.1	83.8	53.1	75.8
15	Hong Kong SAR	B	70.6	66.6	62.0	89.2
16	Canada	B	70.4	67.2	67.0	80.2
17	New Zealand	B	70.4	65.2	68.2	81.7
18	France	B	70.3	85.2	48.6	76.8
19	Mexico	B	69.3	73.5	64.1	69.8
20	Belgium	B	69.2	81.5	42.7	86.8
22	Germany	B	67.8	81.0	47.5	75.0
28	Spain	C+	63.8	83.0	34.2	74.4
30	United States	C+	61.1	64.1	59.9	58.0
37	Italy	C	57.0	69.4	27.9	77.8
39	Japan	C	56.3	57.1	48.0	66.8
42	Austria	C	54.5	67.5	24.0	76.4
52	India	D	43.8	34.7	43.8	58.4

Source: Mercer CFA Institute Global Pension Index 2025 (17th edition), full results table as published by Mercer. Overall values and grades are also confirmed in the CFA Institute press release. Edition: published October 2025, reflecting data and policy as of that year.

Two cautions before reading the table as a verdict. First, grades are assigned by overall value, so countries a tenth of a point apart (Chile and Finland at 76.6, Canada and New Zealand at 70.4) can look alike while having very different profiles. Second, the 2025 edition predates several reforms discussed below, including France's suspension of its 2023 retirement-age increase.

What changed in the 2026 edition

Mercer's results page now lists an 18th, 2026 edition. In it, the Netherlands scores 85.8, Denmark 84.1, Iceland 84.0, Singapore 82.0, and Israel 81.9, and Australia moves up into the A band at 80.6, according to the Mercer results page. The United States rises to 61.6 and stays at C+. This article keeps the 2025 table because it is the edition for which the full sub-index breakdown was published and checked.

How the Mercer CFA index is built, and what it can't tell you

The index is a weighted average. Adequacy carries 40% of the total, sustainability 35%, and integrity 25%. Within each, dozens of indicators feed in: benefit levels, how many people are covered, how much is saved, how much the government owes, how old the population is, how costs are controlled, and whether members are told what they will get.

Think of it like a decathlon. An athlete can win the 100 meters and still finish mid-table if the pole vault goes badly, and the overall points hide which events were won. The same is true here. Kuwait posts the best adequacy score of any system (86.6) but an integrity score of 57.6, which drags it to 13th. The Philippines scores 64.4 on sustainability, better than the United States, but 33.2 on integrity, which is why it sits near the bottom at 47.1.

Why a high rank is not the same as a comfortable retirement

The index scores systems, not households. A system can rank high on design and still leave particular groups short: part-time workers, people with career breaks, or the self-employed. Mercer's own commentary on the United States makes the point from the other direction. It flags threats to long-term adequacy, especially for lower-income and nontraditional workers, even though participation in employer plans supported a small score gain, per InvestmentNews.

The index also does not measure how good retirement feels. Health care, housing costs, family support, and local prices all shape that. Readers comparing countries on well-being more broadly may find the quality of life ranking a better companion than any single pension score.

What the grade bands mean

According to Pension Policy International, an A means an overall value above 80, a D means 35 to 50, and an E means below 35. No country scored an E in 2025. An A-grade system, in Mercer's description, is a robust retirement income system that delivers good benefits, is sustainable, and has high integrity. Eight systems improved their grade in 2025 and none were downgraded.

Pay-as-you-go versus funded: the idea that explains most of the ranking

Most of the gap between the top and the middle of the table comes down to one design choice: where the money for tomorrow's pensions comes from.

A pay-as-you-go system works like a river. Taxes and contributions from today's workers flow straight out to today's retirees, and nothing is stored. It works well while the river is full. When fewer workers support more retirees, the flow shrinks and the only fixes are higher contributions, lower benefits, or a later retirement age.

A funded system works like a reservoir. Workers and employers pay into invested accounts over decades, and the accumulated pool, plus its returns, pays the pensions. The pool can absorb a lean year, but it is exposed to market falls and to bad investment decisions.

Feature	Pay-as-you-go	Funded defined benefit	Funded defined contribution
Where benefits come from	Current taxes and contributions	Invested fund, with a promised benefit	Invested personal or collective account
Who bears investment risk	Nobody directly (political risk instead)	Sponsor or fund	Member
Who bears demographic risk	Taxpayers and retirees	Sponsor, via funding gaps	Member, via a smaller pot
Main weakness	Ageing populations	Underfunding when markets fall	Uncertain income, low saving rates
Examples in this ranking	France, Italy, Germany (largely)	Traditional Dutch and Danish occupational schemes	Australia, Chile, Singapore (CPF)

The data bear this out. The table below subtracts each system's sustainability score from its adequacy score. In the top four, the two scores sit within a few points of each other. In several large pay-as-you-go systems, benefits look strong on paper while sustainability collapses.

System	Adequacy	Sustainability	Gap (adequacy minus sustainability)
Netherlands	86.1	83.5	2.6
Iceland	83.0	85.7	-2.7
Denmark	82.9	85.0	-2.1
Germany	81.0	47.5	33.5
France	85.2	48.6	36.6
Belgium	81.5	42.7	38.8
Italy	69.4	27.9	41.5
Austria	67.5	24.0	43.5
Portugal	83.7	36.4	47.3
Spain	83.0	34.2	48.8

Source: the Mercer CFA Institute 2025 table above. The gap column is simple subtraction by this publication, not an index measure.

Mercer's lead author, Tim Jenkins, adds a second pattern. He said that "pension systems with no or limited restrictions tend to perform better in the Index," and the 2025 report argues governments should make investment options attractive rather than dictate where pension money goes (see the CFA Institute press release).

The Netherlands: three pillars and a retirement age that moves

The Dutch system is the highest-scoring in the index at 85.4, and it is built in three layers, according to the CMS Expert Guide to Pensions (updated August 2025).

Pillar 1 is the AOW, the basic state pension, funded mainly by contributions from people below pension age. CMS puts it at roughly EUR 18,000 gross a year for a single household and about EUR 12,000 per person for couples. Pillar 2 is the workplace pension, run by pension funds or insurers. There is no general legal duty to offer one, yet about 90% of the workforce belongs to a plan, mostly through mandatory industry-wide funds or collective labor agreements. Where employers contribute, they typically pay about two-thirds and the employee one-third. Pillar 3 is voluntary personal savings.

Why the Dutch retirement age is not a political football

The AOW age rose to 67 in 2024 and, under current law, reaches 67 years and 3 months in 2028. The rule behind it ties the age to life expectancy: the law adds three months of working life for every 4.5 months of expected extra life at 65, as reported by the Netherlands Social Insurance Bank. Changes are announced five years ahead, so the 2028 figure was fixed in 2022.

An automatic rule removes the annual fight over whether to raise the age. Workers get five years of notice, and politicians avoid a vote on every adjustment. It works like a thermostat, reacting to a measured input (how long people are living) rather than to the mood of the moment.

The assets, and the biggest rebuild in Dutch pension history

OECD data for end-2024 show Dutch pension assets at 150.9% of GDP, about USD 1.8 trillion. That is large, but it is not the highest in the world: Denmark (206.4%) and Iceland (191.3%) are higher. The figures come from the OECD's Pensions at a Glance 2025.

The Netherlands is also mid-rebuild. Under the Future Pensions Act, which took effect on July 1, 2023, traditional defined benefit promises are being replaced by defined contribution schemes with built-in risk sharing. All funds must switch by January 1, 2028, a deadline pushed back from January 1, 2027, according to European Pensions. CMS notes that defined benefit plans cannot be newly established, and that pension funds may run only "solidary" and "flexible" defined contribution designs, with reserves of up to 15% of fund assets to smooth shocks.

This is why the Dutch score deserves a footnote. The 2025 grade reflects the old structure plus the promise of the new one. How the transition performs is still unfolding, and the largest funds are moving in waves across 2026 and 2027.

Iceland and Denmark: high savings rates and big pools

Iceland scores 84.0 and leads the whole index on sustainability at 85.7. The reason is plain arithmetic. Workers and the self-employed aged 16 to 70 pay 4% of total wages into a pension fund and employers pay at least 11.5%, for a combined 15.5%, according to the Icelandic pension funds' association lifeyrismal.is. Those contributions accumulate in funds that, by the OECD's count, hold assets worth 191.3% of GDP.

The association describes 15.5% as the minimum mandatory contribution, with exceptions for some groups such as bank employees and workers in older state and municipal schemes.

Denmark scores 82.3 on the strength of an 85.0 sustainability value and 82.9 adequacy, with the weakest integrity score of the A-grade group (77.6). Its pension assets are the largest relative to GDP in the OECD, at 206.4%.

Denmark's retirement age is climbing to 70

Denmark ties its state pension (folkepension) to life expectancy through a 2006 welfare agreement. On May 22, 2025, Parliament adopted the existing plan: the age is 67 now, 68 in 2030, 69 in 2035, and 70 in 2040 for people born after December 31, 1970, as The Local Denmark reports. Prime Minister Mette Frederiksen has said her party wants to renegotiate the automatic mechanism once the age reaches 70.

That detail matters for the "best system" label. Critics have argued that the higher age hits people in physically demanding and lower-paid jobs hardest. A system can be sustainable partly because it asks more of workers, and whether that counts as "best" depends on who is asked. A 2022 government commission proposed weakening the link between life expectancy and retirement age, saying this could be done without endangering the long-term sustainability of public finances.

Singapore: the first Asian A, built on forced saving

Singapore's 80.8 earned it an A for the first time in the index's history, and it remains the only Asian system with that grade in the 2025 edition. Its signature feature is the highest integrity score among the A-grade group (90.4), alongside a middling sustainability value (75.5).

The Central Provident Fund (CPF) is a compulsory savings scheme. From January 1, 2026, employees aged 55 and under with monthly wages above S$750 contribute 20% of wages and employers add 17%, a combined 37%, according to the CPF Board. The money is split across accounts with different jobs.

CPF account	Purpose
Ordinary Account (OA)	Housing, including buying a property or paying a housing loan
Special Account (SA)	Retirement savings, closed at age 55
MediSave Account (MA)	Healthcare costs and approved medical insurance premiums
Retirement Account (RA)	Created at 55; funds CPF LIFE monthly payouts for life

Source: CPF Board member overview.

The trade-off hidden in a combined account

Bundling housing, health, and retirement savings simplifies saving, and CPF LIFE (an annuity that pays monthly for as long as a member lives, which members can join from 65) addresses the risk of outliving savings. The cost is that money spent on housing from the Ordinary Account is no longer available as retirement income. The CPF Board offers housing monetisation options, such as the Silver Housing Bonus and the Lease Buyback Scheme, which route proceeds into the retirement account. A reader should see this as a design choice with a trade-off rather than a flaw: the account structure favors home ownership, and home value then becomes a major part of retirement security.

Australia: a mandatory 12% that built an A$4.77 trillion pool

Australia scored 77.6 in 2025, a B+ with a split profile: adequacy of 69.0, sustainability of 81.1, and integrity of 86.4. Its compulsory superannuation system, introduced in 1992, requires employers to pay a percentage of employees' earnings into a super fund. That rate reached its legislated final level of 12% on July 1, 2025, per Mozo's superannuation guide. Total superannuation assets were A$4,767.2 billion at June 30, 2026, up 9.5% from A$4,353.9 billion a year earlier, according to the Australian Prudential Regulation Authority. Contributions in the year to June 2026 totalled A$236.3 billion. The OECD puts Australian pension assets at 135.1% of GDP at end-2024.

The weak spot is adequacy, and the drawdown phase

Australia's adequacy sub-index (69.0) is the lowest among the B+ group's leaders. Super balances track work history, so people with interrupted careers, part-time work, or low earnings retire with smaller pots. The other known weakness is the drawdown phase, the years when a retiree must turn a lump sum into an income stream that lasts. A defined contribution system hands the member a number and a long life expectancy, and the member has to make them match. As noted earlier, Mercer's 2026 edition lifts Australia into the A band, so the trend is upward.

Where pay-as-you-go strains: France, Italy, Germany, and the rest

The lower half of the sustainability column is full of countries that pay benefits generously. France scores 85.2 on adequacy and 48.6 on sustainability. Italy, with 69.4 on adequacy, scores just 27.9 on sustainability. Austria has the lowest sustainability value in the table at 24.0.

Public spending explains part of the story. The OECD's Pensions at a Glance 2025 reports that Greece and Italy spend about 16% of GDP on public pensions, with Austria, France, and Portugal at roughly 13% to 14%. Eurostat data for 2021, reported by Eunews, put pension spending at 16.4% of GDP in Greece, 16.3% in Italy, 15% in Austria, and 14.9% in France, against 12.9% for the EU as a whole. The same release put Italy's average age at 48, the oldest in the EU. Anyone curious about why ageing hits these budgets so hard can compare countries with the oldest populations with the countries with the lowest birth rates.

France: a reform passed, then paused

France is the clearest recent case. The 2023 law raised the legal retirement age from 62 toward 64, and Mercer's France team said the 2025 score held because of that reform. On December 16, 2025, the National Assembly adopted a social security budget that suspends the increase, by 247 votes to 232, according to The Local France. The suspension was a concession to win Socialist support for the budget.

Mercer France warned, when the 2025 index came out, that suspending the reform could put the French rating at risk in 2026. Mercer's results page lists France at 70.3 in 2026, unchanged from 2025. The sustainability gap remains large, and the episode shows how fragile reform is in a pay-as-you-go system: the benefit is paid to voters now, and the cost lands on later generations.

The wider cost of an ageing population

The pressure is not limited to Europe's continental systems. A smaller workforce supporting more retirees is a global trend, and it is the core subject of our piece on how demographics will reshape the global economy. Where governments carry large debts as well, pensions compete with interest payments for the same budget; the countries with the highest national debt face that squeeze most directly.

The United States: a C+ with a visible deadline

The United States scored 61.1 in 2025, a C+ and rank 30 of 52. It improved by 0.7 points from the 2024 score of 60.4 but slipped one place, per InvestmentNews and Pension Policy International. Adequacy scored 64.1, sustainability 59.9, and integrity 58.0.

The sustainability score reflects the finances of Social Security. In the 2026 Trustees Report, the retirement trust fund (OASI) is projected to be depleted in the fourth quarter of 2032, and the combined retirement and disability funds in the third quarter of 2034. After that, incoming tax revenue would cover about 83% of scheduled combined benefits in 2034, falling to 65% by 2100. The 75-year actuarial deficit widened to 4.42% of taxable payroll from 3.82% a year earlier, per the Congressional Research Service summary of the report.

Those numbers describe what happens with no change in law, not a forecast that benefits will vanish. They are a statement of the size of the choice: higher payroll taxes, lower benefits, or some mix. For the household side of the question, see our explainer on how to plan for retirement without the marketing spin.

What the OECD data add to the picture

The OECD's Pensions at a Glance 2025 offers a wider backdrop that no single ranking captures:

• Retirement ages are rising. The average normal retirement age across OECD countries is 64.7 for men and 63.9 for women retiring in 2024. For people starting careers in 2024 it is projected at 66.4 and 65.9, based on current legislation.
• Mandatory schemes replace a lot of pay, on average. For an average earner with a full career, the OECD average net replacement rate from mandatory schemes is 63.2% of pre-retirement net income.
• Savings pools are large and growing. Assets in pension plans reached 95% of the combined GDP of OECD countries at end-2024, up from 87% in the prior edition.
• The gender gap is narrowing. The average gender pension gap fell from 28% in 2007 to 23% in 2024.

The OECD's separate Pension Markets in Focus 2025 reports that OECD pension assets reached a record USD 69.8 trillion at end-2024, helped by an average nominal investment return of 9.1%. Defined benefit plans made up 31.9% of assets at end-2024, down from 39.7% in 2014. Returns that high are not guaranteed, which is exactly why members of defined contribution systems carry more risk than the headline asset figures suggest. For readers who want to understand how long-run compounding works in these pools, see compound interest explained.

A short history of the idea

Public pensions are younger than most people assume. On May 24, 1889, the German Reichstag passed laws on invalidity and old-age insurance under Chancellor Otto von Bismarck, who wanted to ease social hardship and reduce support for the labor movement. The old-age pension was payable from age 70, contributions were shared by employees, employers, and the state, and the schemes came into force in 1891, according to the Deutschlandmuseum. The museum notes that average life expectancy was about 40, so few people lived to collect, a figure that is dragged down by infant and child deaths and overstates how rarely adults reached 70.

The design questions that drove the later leaders came in two waves. In 1994 the World Bank published Averting the Old Age Crisis, which argued for a multi-pillar approach rather than a single pay-as-you-go system. Chile had already replaced its state-run system with individual accounts managed by private pension funds around 1980 and 1981, and that reform became a template for many countries. Evaluations of the Chilean model have varied since, and Chile sits at 76.6 and a B+ in the 2025 index, with a strong integrity score of 86.6 and a middling adequacy score of 71.9.

What people get wrong about pension rankings

"A funded system always beats pay-as-you-go." Funding helps sustainability, but it does not guarantee adequacy. Australia has a funded system and a 69.0 adequacy score. The top-scoring Dutch system also keeps a pay-as-you-go state pension, the AOW, as its base layer, funded mainly by contributions from people below pension age.

"The highest benefits make the best system." France scores 85.2 on adequacy, the highest in Europe after the Netherlands, yet lands at 70.3 overall because of its sustainability score of 48.6.

"The ranking measures how happy retirees are." It scores system design and governance. It says little about health care, housing, or family networks.

"Rank 30 means a system is failing." The United States has large employer-based retirement savings alongside a public system with a known funding gap. Its C+ reflects a mix of strengths and weaknesses rather than collapse. For a closer look at how people draw down savings, see the 4% rule explained.

"A model that works in one country can simply be copied." Context matters. In the Netherlands, about 90% of workers are in a workplace plan largely because industry-wide funds and collective labor agreements make membership close to automatic, per CMS. Copying the investment rules without that coverage mechanism would produce a very different result. The Mercer authors make a related point from the policy side: they argue that governments get better outcomes by making investment options attractive and transparent than by mandating where the money goes.

Frequently asked questions

Q: Which country has the best pension system in the world? A: The Netherlands, with an overall value of 85.4 and an A grade in the 2025 Mercer CFA Institute Global Pension Index. Iceland (84.0) and Denmark (82.3) follow. The Netherlands scores high on all three parts of the index: adequacy (86.1), sustainability (83.5), and integrity (86.8).

Q: Why did Singapore get an A in 2025? A: Singapore scored 80.8 and received its first A in the index's 17-year history. Its integrity score of 90.4 is the highest among the A-grade systems, and its adequacy score is 79.4. Its Central Provident Fund requires a combined contribution of 37% of wages for employees aged 55 and under, as of January 2026.

Q: What is the difference between a defined benefit and defined contribution pension? A: A defined benefit pension promises a set income in retirement, usually based on salary and years of service, so the sponsor carries the investment risk. A defined contribution pension builds a pot from contributions, and the final income depends on investment results, so the member carries the risk. The Netherlands is moving from defined benefit to defined contribution schemes with shared risk, with a final deadline of January 1, 2028.

Q: At what age do people retire in the top-ranked countries? A: It varies, and several countries tie the age to life expectancy. The Dutch state pension age is 67 in 2025 and rises to 67 years and 3 months in 2028. Denmark's is 67 now, scheduled to reach 70 in 2040 for people born after December 31, 1970. Iceland's contributions run from ages 16 to 70, but its state-pension age is not covered in the sources used here.

Q: How is the United States ranked, and why? A: The United States ranked 30th of 52 in 2025 with a score of 61.1 (C+). The 2026 Social Security Trustees Report projects that the retirement trust fund will be depleted in the fourth quarter of 2032 and the combined funds in the third quarter of 2034, which weighs on the sustainability score of 59.9.

Q: Does a higher pension ranking mean better retirement outcomes for every person? A: No. The index scores national systems on adequacy, sustainability, and integrity, not individual retirees. Part-time workers, people with career breaks, and the self-employed can fare worse than the national figures suggest, even in the highest-ranked countries.

The takeaway

The best pension systems are not the ones that promise the most. They are the ones whose promises match the money, with large pools of saving built up in advance, rules that adjust as people live longer, and regulators who keep the system honest. The Netherlands, Iceland, and Denmark have all three, while France, Italy, and Spain show what happens when generous benefits are paid from a shrinking river of contributions. The ranking is a snapshot, though, and its leaders are changing: the Netherlands is rebuilding its system by 2028, Denmark is raising its retirement age to 70, and Australia has just reached a 12% contribution rate. The most useful way to read the table is as a set of trade-offs, not a podium.

Sources

• Mercer and CFA Institute, Global Pension Index 2025 full results table: Mercer newsroom
• CFA Institute, 2025 Global Pension Index press release, October 15, 2025
• Mercer, Global Pension Index results page (2026 edition scores)
• Pension Policy International, 2025 index summary
• OECD, Pensions at a Glance 2025 and Pension Markets in Focus 2025 (asset, replacement-rate, retirement-age, and spending figures cited above)
• CMS, Expert Guide to Pensions: Netherlands, August 2025
• Australian Prudential Regulation Authority, superannuation statistics, June 2026
• CPF Board, contribution rates and member overview
• Congressional Research Service, Social Security: Selected Findings of the 2026 Annual Report
• Educational overview only: this article describes national systems and published rankings and does not recommend any investment or retirement decision.

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