Riyadh: Mercer, a global consulting leader in health, wealth and career, released the results of its 2019 Melbourne Mercer Global Pension Index survey (MMGPI) that compares pension plans across the world. According to the survey, Saudi Arabia had an overall index value of 57.1 among the countries analysed, scoring better than countries like Japan and Italy.
This year’s index edition added three retirement systems; Philippines, Thailand and Turkey, to compare a total of 37 retirement systems across the globe and covering almost two-thirds of the world’s population.
Tarek Zouiten, Mercer's Retirement Business Leader for the Middle East, said: “We are pleased to have Saudi Arabia in the Global Pension Index for the second year, especially with the country keeping its positive rating. The government is working towards implementing new
strategies that will allow Saudi Arabia to improve its current pension system, including better administration processes, more digitalization, stronger governance and better coordination between government agencies. The Saudi Government is also committed to working with the private sector in order to provide customised benefits and services for pensioners and beneficiaries as an add-on for the existing services in all regions of the kingdom”.
The report also underlines areas of improvement for the pension system surveyed. In the Kingdom of Saudi Arabia, the report suggests improving the minimum level of support for the lowest earning group under adequacy while in terms of sustainability, it is recommended to increase the state pension age to better reflect increasing life expectancy. Finally, the integrity index could be further elevated by enhancing the required level of communication to pensioners and building awareness among employees on the need to save toward retirement.
The MMGPI uses the weighted average of the sub-indices of adequacy, sustainability and integrity to measure each retirement system against more than 40 indicators. The 2019 Index takes a new approach to calculate the net replacement rate, that is, the level of retirement income provided to replace the previous level of employment earnings. While most previous Index reports have calculated a net replacement rate based on the median income earner, the current report uses a range of income levels based on the Organisation for Economic Co-operation and Development data to represent a broader group of retirees.
By the numbers
The Netherlands had the highest index value (81.0), and has consistently held first or second position for 10 out of the past 11 MMGPI reports. Thailand had the lowest index value (39.4).
For each sub-index, the highest scores were Ireland for adequacy (81.5), Denmark for sustainability (82.0) and Finland for integrity (92.3). The lowest scores were Thailand for adequacy (35.8), Italy for sustainability (19.0) and Philippines for integrity (34.7)
The MMGPI, supported by the Victorian Government of Australia, is a collaborative research project between the Monash Centre for Financial Studies (MCFS) – a research centre based within Monash Business School at Monash University in Melbourne – and professional services firm, Mercer. To download the full report, visit this link.
About the Monash Centre for Financial Studies
A research centre based within Monash University's Monash Business School, Australia, the MCFS aims to bring academic rigour into researching issues of practical relevance to the financial industry. Additionally, through its engagement programs, it facilitates two-way exchange of knowledge between academics and practitioners. The Centre’s developing research agenda is broad but has a current concentration on issues relevant to the asset management industry, including retirement savings, sustainable finance and technological disruption.
Mercer delivers advice and technology-driven solutions that help organisations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people with more than 76,000 colleagues and annualised revenue approaching $17 billion. Through its market-leading companies including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment.. For more information, visit www.me.mercer.com. Follow Mercer on Twitter @Mercermiddleast
© Press Release 2019