2024 Global Pension Index ranks Ireland in 18th place - Mercer / CFA Institute 

• Index compares 48 retirement income systems, covering 65% of the world’s population
• Ireland’s retirement income system drops from 13^th to 18^th position overall
• Ireland ranked 14^th on the integrity sub-index (80.5); 18^th on the Adequacy sub-index (73.6) and 24^th on the Sustainability sub-index (52.8)
• The Netherlands retains top spot as world’s leading retirement income system, followed by Iceland and Denmark in 2^nd and 3^rd place respectively

Dublin, October 15, 2024 — Mercer and CFA Institute today released the 16th annual Mercer CFA Institute Global Pension Index (MCGPI).

Ireland’s retirement income system ranks in 18th place in the latest edition of the Mercer CFA Institute Global Pension Index (MCGPI) which compares 48 retirement income systems globally, covering 65% of the world’s population.

The overall ranking is down from 13th place in 2023 to 18th place in 2024, with the index value decreasing slightly from 70.2 in 2023 to 68.1. The reduction has been attributed to a decrease in the value of the State pension relative to the average national wage as well as a fall in net pension replacement rates and a reduction in the household saving rate.

The Netherlands’ retirement income system has retained the top spot on the list, with Iceland and Denmark remaining in second and third places, respectively. The Irish system scored ahead of some other European systems such as France (68), Germany (67.3), Spain (63.3) and Portugal (66.9), but behind Denmark (81.6); Finland (75.9), Norway (75.2), Sweden (74.3) and the UK (71.6).  

Ireland’s retirement income system comprises a flat-rate basic social security scheme and a means-tested benefit for those without sufficient social insurance contributions. Voluntary occupational pension schemes and personal pension schemes provide supplementary income in retirement.

The occupational pensions market in Ireland continues to experience a period of rationalisation following the introduction of the IORP II Directive. As a result of increased regulatory compliance requirements, many plans have been consolidating into master trusts. Additionally, Ireland has been planning for the introduction of an auto enrolment retirement saving system in recent years, with a launch date of 30 September 2025 recently announced by the Government.

Commenting on Ireland’s performance in the latest index, Caitriona MacGuinness, DC and Private Wealth Leader for Mercer in Ireland, said: “Ireland’s retirement income system continues to rank highly in the Mercer CFA Global Pension Index, mainly due to strong adequacy and integrity scores. The growing popularity of master trusts has supported Ireland’s strong integrity score, due to the professionally run nature of these schemes and the additional regulatory oversight they receive”.

Ms MacGuinness added, “While Ireland ranks below average on the sustainability index, the introduction of an auto enrolment retirement savings system, would improve Ireland’s overall index value in the future. We welcome the recent Government announcement that auto enrolment savings is due to commence in Ireland on 30 September 2025. This new regime should reduce dependence on the State Pension as the numbers saving for their retirement increases over time”.

Long-term sustainability of the State Pension system has also started to be addressed through measures allowing greater flexibility around timing of drawdown (which will phase in from 2025) as well as gradual, incremental increases in social insurance rates starting this month with a 0.1% hike. The Government plans to increase PRSI by 0.70% over five years.

Ms MacGuinness added that “the different State Pension reform measures are expected to help improve the long-term sustainability of Ireland's overall pension system".

Helping DC plan members get the best retirement outcomes

Retirement systems around the world are increasingly moving away from defined benefit (DB) plans and shifting to defined contribution (DC) arrangements. The report explores the opportunities and challenges associated with DC plans for both pension plans and individuals.

“The ongoing shift to defined contribution pension plans introduces many financial planning challenges, which are falling squarely on the shoulders of tomorrow’s retirees,” said Margaret Franklin, CFA, President and CEO, CFA Institute. “DC plans require individuals to make complex financial planning decisions that may significantly impact their financial circumstances, and yet many individuals are not well prepared to manage the required decisions. The Index serves as an important reminder of the gaps that remain in providing long-term financial security and advice for individuals. The need for credentialed and ethical financial advisors once again stands out, and that’s why we have launched new initiatives in the private wealth space to meet this gap.”

Despite these challenges, as people live longer, the increased flexibility and personalization offered by DC programs will be critical. The concept of retirement is shifting, and many individuals are transitioning gradually to retirement or rejoining the workforce in a different capacity after their initial retirement. DC plans also offer important benefits to gig and contract workers, who have often been left out of traditional DB schemes.

“Significant retirement income system reforms are needed to meet the financial needs of retirees and their evolving work expectations,” commented Dr. David Knox, lead author of the report and a Senior Partner at Mercer. “There is no single solution to getting retirement systems onto more solid ground. Now is the time for governments, policymakers, the pension industry and employers to work together to ensure that older populations are treated with dignity and can maintain a lifestyle similar to what they experienced through their working years.”

By the numbers

The Netherlands had the highest overall index value (84.8), closely followed by Iceland (83.4) and Denmark (81.6). The Netherlands’ pension system continues to experience the positive impact of the move from a collective DB structure to a more individual DC approach, in addition to the country’s strong regulations and assistance available to participants.

The Index uses the weighted average of the sub-indices of adequacy, sustainability and integrity. For each sub-index, the systems with the highest values were the Netherlands for adequacy (86.3), Iceland for sustainability (84.3) and Finland for integrity (90.8).

Increasing longevity, high interest rates and rising costs of care have put increased pressure on government budgets to support pension programs, causing scores to be slightly lower this year overall. Several systems, including China, Mexico, India and France, have undertaken pension reforms in recent years. The most recent pension reforms in China, announced in September, are not reflected in its Index score. 

2024 Mercer CFA Institute Global Pension Index

About the Mercer CFA Institute Global Pension Index (MCGPI)

The MCGPI benchmarks retirement income systems around the world and suggests possible areas of reform that would provide more adequate and sustainable retirement benefits. This year, it compares 48 retirement income systems across the globe, including a new entrant, Vietnam, and covers 65% of the world’s population.

The Global Pension Index is a collaborative research project co-sponsored by CFA Institute and Mercer and is supported by the Monash Centre for Financial Studies (MCFS). Find more information about the Mercer CFA Institute Global Pension Index here.

About Mercer

Mercer, a business of Marsh McLennan (NYSE: MMC), is a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes for their people. Marsh McLennan is a global leader in risk, strategy and people, advising clients in 130 countries across four businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman. With annual revenue of $23 billion and more than 85,000 colleagues, Marsh McLennan helps build the confidence to thrive through the power of perspective. For more information, visit mercer.com, or follow on LinkedIn and X.

About CFA Institute

As the global association of investment professionals, CFA Institute sets the standard for professional excellence and credentials. We champion ethical behavior in investment markets and serve as the leading source of learning and research for the investment industry. We believe in fostering an environment where investors’ interests come first, markets function at their best, and economies grow. With more than 200,000 charterholders worldwide across 160 markets, CFA Institute has 10 offices and 160 local societies. Find us at www.cfainstitute.org or follow us on LinkedIn and X at @CFAInstitute. 

About the Monash Centre for Financial Studies (MCFS)

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.

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