France continues to lose one place in the world ranking of the most efficient and balanced pension systems (according to a number of criteria, see box below). After occupying 21st place in 2021 and even 20th in 2020, France has dropped to 22nd place in the Mercer index, jointly developed by the company of the same name, specializing in human resources, health, pension and retirement consulting, as well as the CFA Institute.
For its part, the tricolor system gains almost 3 points in the index compared to 2021, going from 60.5 to 63.2 in 2022, according to the 14th edition of this ranking released this Tuesday. Compared to last year, the French pension system is considered more advantageous in terms of living conditions for retirees, but its long-term viability has deteriorated.
The Mercer CFA Institute Global Pension Index (MCGPI) is compiled each year based on some fifty weighted criteria related to performance (measuring retirees’ standard of living), viability (long-term financial balance), and integrity (the legibility of its operation for citizens) of pension systems. “The ranking compares 44 pension systems, which cover 65% of the world’s population,” the company said in a statement.
Iceland, Holland and Denmark in the lead
Iceland ranks first for the second year in a row, while Thailand ranks last and 44th. The Netherlands and Denmark occupy the second and third steps of the podium.
Although France occupies an average position, in the middle of the table, it shows very contrasting sub-indices. Thus, its performance score -up 5 points compared to 2021-, which focuses on the living conditions of retirees, seems to be among the highest of the 44 countries observed. Only Iceland and the Netherlands, first and second respectively in the ranking, show a higher sub-index.
On the contrary, viability is the great weakness of the French pension system, which is among the twelve systems considered least sustainable and least secure in the long term.
The increase in the recommended retirement age in France
Mercer presents several ways to increase the index of the French system, and in particular its viability and integrity sub-indices, such as raising the level of contributions, raising the legal retirement age and increasing the activity rate of the elderly in particular.
Recommendations not so far from what the executive plans in France. Among the main measures that should be on the table for the next pension reform, is precisely the reduction of the legal retirement age to 64 or 65 years. The government is also working on measures to encourage the employment of older people.
Overall, the report’s authors emphasize the growing role of funded retirement. A phenomenon that they explain by “the acceleration of the substitution of defined benefit plans for defined contribution plans”.
Source: BFM TV
