International comparison: These countries have the best pension systems worldwide

The Netherlands has the best pension system in the world. With an overall score of 85.4 points, the Dutch rank first in Mercer's Global Pension Index. The management consultancy compared retirement savings in 52 countries worldwide. "The Dutch pension system continues to benefit from its transition from a collective defined benefit structure to a more individualized defined contribution approach, as well as the country's strict regulations and support for future pensioners," write the study authors.

Iceland, Denmark, and Singapore also achieved top marks. Israel, which ranked fourth last year, slipped one place. Singapore, on the other hand, rose one place. These countries are therefore the only ones with a first-class, robust pension system that provides its recipients with consistently good benefits.

Best pension systems in a global country comparison How does Germany's pension system compare internationally?

With an overall score of 67.8 points, the German pension system ranks only 22nd (previous year: 20th), the second-best ranking. While this confirms that the German pension system has a solid structure with many good benefits, it also identifies several areas with significant potential for improvement.

Although the German pension system ranks among the top group in the sub-category “adequacy,” ranking 10th (previous year: 9th), the long-term financial viability of the system remains the greatest challenge.

Germany also performs well below average in terms of sustainability. In the index, sustainability is synonymous with whether a pension system can be maintained in the future. Therefore, there is an urgent need to catch up in this area.

Pay-as-you-go pension systems are coming under increasing pressure. As a result, there are increasing proposals to raise the retirement age to 70. However, the majority of citizens in this country oppose retirement at 70.

"Germany faces the major challenge of making its pension system more resilient to demographic change," explains Michael Sauler, Head of Wealth at Mercer Germany. "A higher minimum pension for low-earners, more funded pension contributions, and broader employee involvement in employer-sponsored pension plans represent opportunities to future-proof pension provision in Germany."

What pension system does Germany have?

The German pension system is an income-related pay-as-you-go system. Pensions are calculated based on the number of pension points earned during a person's working life. If individual retirement provision from all sources of income is insufficient, additional means-tested benefits are available.

Source: OECD (2021)

Pensions in other countries

While Switzerland's pension system narrowly misses the top 10 with an overall score of 72.4 points, ranking 12th, Austria only ranks 40th with 54.5 points. This puts Germany's neighbor only in third place. The same applies to the US pension system (61.1 points, 29th place), which, while offering some good features, also reveals some significant risks and deficiencies that must be addressed for the system to function in the long term.

Which country has the highest pension?

According to the OECD's 2023 analysis, the highest pension based on pre-retirement income is in Turkey. There, the average earner receives 103.3% of their previous net income after retirement.

Retirement age in comparison

According to the latest OECD report, many countries plan to gradually increase the retirement age. In 23 of 38 OECD countries, the normal retirement age will increase, with the average being 66.3 years for men and 65.8 years for women.

On the following pages, discover the world's 10 best pension systems in detail. What is the set retirement age, and when do men and women actually retire? How high is the pension compared to income? What do the world's best pension systems do differently than Germany's?