The index focuses on how countries across the globe are tracking to provide adequate retirement income for their older population.

Presented by Mercer CEO Martin Lewington, the index reveals “Pension systems are crucial to the functionality of modern societies.

“Fifty-six per cent of people rate retirement income as their number one investment goal, yet globally trust in pension systems remains low.”

The index highlighted three main topics: Adequacy, sustainability and integrity.

In adequacy, the value of the pension system was tracked across the countries who submitted.

The number one country was the Netherlands who scored 81.5%. New Zealand came in at number 18 – dragged down by net household debt, along with Australia and Canada.

In the sustainability category, whether the benefits of pension income was sustainable was measured.

The highest ranking country was Denmark at 82.6%. New Zealand achieved ninth place with 62.9%.

Under the integrity category, the trust and confidence in pension systems was measured. Finland was first in this category with 93.5%.

New Zealand finished with a top five ranking due to engagement in the NZ KiwiSaver scheme.

One of the takeaways from the report was the impact of Covid.

CFA principal economist Christina Leung said that while the NZ economy has proved resilient, “The V-shaped recovery has been sharper than anyone expected. At a macro level this is a positive, but this has been uneven across sectors, industry and parts of society.”

In order to combat this unevenness which he sees as the “gap between the haves and the have-nots getting wider,” Lewington believes that New Zealand needs to make a commitment to improving our retirement systems.

“Global pension reforms are needed and New Zealand has our part to play. Our levels of KiwiSaver contributions are low, we need to encourage an increase in that space across the country.

“Also, owning a home has long been a pillar of New Zealand retirement, that is getting harder and harder for many young New Zealanders today.”

Aaron Drew, managing director of MyFiduciary believes that changing the way pension systems are taxed has a big role to play in improving the New Zealand system.

“The thrust of the report is that we are scoring well on integrity. That’s a sign of the good work from the regulator, but we need to do better on sustainability and increase our contribution rates.

“We need a change to the NZ tax system where you are [being] taxed on your contributions, on your way through, as well as on your way out. It is a money-go-round and it doesn’t make sense when you are trying to build savings.”

The report covered over two thirds of the world’s population, ranking 39 income systems against more than 50 indicators. For more details you can read the report in full HERE.