US climbs Western Europe-dominated Natixis Global Retirement Index

US climbs Western Europe-dominated Natixis Global Retirement Index

The US moved up one spot in the Natixis Global Retirement Index to 16th, but fell well short of Western European countries such as Switzerland and the Netherlands, which continue to dominate the top 10.

Now in its sixth year, the Natixis Global Retirement Index provides a snapshot of 43 countries and their relative score on key measures that influence retirement security. An overall score for each country is based on an examination of 18 factors across four broad categories: Finances in Retirement, Material Wellbeing, Quality of Life and Health.

Natixis attributed the modest rise of the US to improving economic conditions and financial institutional strength, particularly as ultra-low interest rates, growing levels of public debt, aging populations and human longevity challenge the sustainability of retirement systems.

Jean Raby, CEO at Natixis Investment Managers, said: “Global retirement security is facing a multi-dimensional problem, as the traditional three-pillar funding model is challenged by 21st century demographics, fiscal imbalances and monetary policies that are straining the resources of individuals, employers and governments around the world.”

“We hope this report will serve as a framework for much-needed dialogue among policymakers, pension managers, workers and the financial industry about how to meet the needs of today’s retirees while preserving retirement security for future generations.”

Western Europe continues to dominate the top 10 countries in the 2018 index, including Switzerland (1st), Iceland (2nd), Norway (3rd), Sweden (4th), Denmark (8th) and the Netherlands (10th). New Zealand (5th) and Australia (6th) maintain their positions in the top 10.

Ireland entered the top 10 for the first time, climbing from 14th last year to 7th, which is the largest jump in both rankings and score of all countries. Ireland’s ability to cut its unemployment rate to 6.2% as of 2017, and subsequently reduce income inequality, contributed to its rise in the index, according to Natixis. It also boasts a significant improvement in tax pressure, and so an increase in the level of disposable income of retirees.

Canada returned to the top 10 (9th) mainly as a result of improvements in the biodiversity, air quality and environmental factors indicators within the Quality of Life sub-index. It has the second-highest air quality and seventh-highest personal happiness scores in the entire index. In the Material Wellbeing category, Canada’s unemployment indicator improved as the country benefited from a stronger jobs market in 2017.

“This year the countries in the top 10 all benefit from three strong main factors: their social programmes, widely accessible healthcare and low levels of income inequality,” said Ed Farrington, executive vice president of retirement strategies at Natixis Investment Managers.

“That said, none of the countries are entirely immune to the challenges that are associated with an aging population, strained government resources and a pension crisis. Today’s stakeholders need to reevaluate old assumptions so that we can ensure individuals can live securely in the years following their retirement.”

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