If you’re thinking about retiring abroad it’s critical that you learn all about the nations in the world where they give their retirees the best pension.  After all, you may be able to benefit!  If you’re still in employment perhaps you could relocate to the best nation and take up residence and qualify for their pension scheme?

Alternatively, if you want to retire abroad it will be important to know where in the world pension provision is very poor, so that if you really want to live there anyway you can ensure you have enough in your own private pension pot to afford yourself a decent standard of living throughout your retirement.

Thanks to a comprehensive survey undertaken by Mercer we can reveal the top 10 nations in the world for pension provision, and explain to you why they rank as they do, and any pitfalls you may need to watch out for if you’re hoping to relocate and benefit from a given country’s pension scheme.  What’s more, it’s worth noting that some countries in the top 10 are in the British frozen pension list…

The Melbourne Mercer Global Pension Index was constructed in conjunction with the Australian Centre for Financial Studies.  It’s now in its sixth year and encompasses results from 25 nations globally.

According to the Index’s executive summary: “The primary objective of this research is to benchmark each country’s retirement income system using more than 50 questions.  An important secondary purpose is to highlight the shortcoming in each country’s system and to suggest possible areas of reform that would provide more adequate retirement benefits, increased sustainability over the longer term and/or a greater trust in the pension system.”

So, the top 10 nations for pension provision are: –

1) Denmark
2) Australia
3) Netherlands
4) Finland
5) Switzerland
6) Sweden
7) Canada
8) Chile
9) UK
10) Singapore

The majority of these nations have one thing in common: with ageing populations they all face sustainability stressors.  This is something to personally bear in mind if you’re serious about relocating before retirement and joining in with a country’s state pension scheme…will it still be rated as well when you come to retire?

Another thing to of course closely research is which countries offer access to any state pension provision to expatriates who relocate to live and work and be tax-resident in their nation.

In terms of the above listing of the top 10 countries, Denmark is miles ahead of the rest of the nations.  In fact, it’s in a category of its own having scored so many positive points that it is the only nation to have an A rating.

An A rating means: “A first class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity.”

The report goes on to comment: “Denmark’s retirement income system comprises a public basic pension scheme, a means-tested supplementary pension benefit, a fully funded defined contribution scheme, and mandatory occupational schemes.”

And whilst it’s head and shoulders above the rest of the nations, it could actually be improved upon in terms of its future sustainability if household savings were increased nationally.

So could a conclusion be drawn from this that if a country gives their citizens too much in the way of a decent pension plan, they are less likely to save for themselves towards retirement?

All of the other 9 nations making up the top 10 positions achieve a B or B+ rating which equates to: “A system that has a sound structure, with many good features, but has some areas for improvement that differentiates it from an A-grade system.”

The areas of improvement differ on a nation-by-nation basis.  For example, Switzerland is encouraged to make changes that will prevent pre-retirement access to funds and encourage more of a pension be used to provide an income for retirement.

Whereas the UK needs to improve by: –

Raising the minimum pension for low-income pensioners
Increasing the coverage of employees in occupational pension schemes Increasing the level of contributions to occupational pension schemes
Raising the level of household saving
Increasing the labour force
Participation rate at older ages

No mean feat!

In terms of the remaining nations please don’t forget that if you move to Canada or Australia as a retiree and expect to access your British state pension you may be in for a nasty shock.  Both countries are in the list of 100+ nations where the British state pension is frozen for expat retirees.

It doesn’t matter how good or otherwise local provision is for local people, if you’re going to be reliant upon the British state pension and you move to a country where it’s frozen, you will be in for a bad shock.

It’s clear that Nordic nations rank extremely highly when it comes to their pension systems.  There are 3 in the top 10…but we can’t help wondering why Norway hasn’t been ranked by Mercer.

Norway’s sovereign wealth fund is valued at circa $760bn and it’s the biggest sovereign wealth fund in the world.  According to MoneyWeek: “The fund is now so large that it owns – on average – 1.25% of every global company…one in every eighty dollars invested in the global equity market is owned by the Norwegian population.”

And yet Mercer hasn’t even considered it.  Perhaps it’s too far away in a league of its own and it would just make all the other countries feel inferior!

Hopefully Mercer’s study of which nations’ pension schemes rank highly will help you choose where in the world you’d like to work towards your retirement!