From uncertain economics to aging demographics to climate change, global retirement security faces a wide range of modern risks. These issues have sweeping implications for a sustainable society. But, while they need to evaluate from both global and national perspectives, the ultimate risks to retirement security actually lie closer to home.
Our 2019 Global Retirement Index reveals three key threats to retirement security – interest rates, demographics, and climate change – as well as what they mean for individuals and institutions.
Top 10 Countries for Retirement Security
Luxembourg moves up one spot from 11th last year to break into the top ten, replacing the Netherlands, bolstered by higher relative scores in Quality of Life and Material Wellbeing sub-indices.
Key Factors
- Best of class finishes for insured health expenditure (2nd) and health expenditure per capita (3rd)
- Better scores in the environmental factors and happiness indicators compared to 2018
- Improvements in the employment indicator offset lower scores in income equality and income per capita
Australia slides three places to ninth overall this year. While Australia improved in both the Health (11th) and Material Wellbeing (24th) sub-indices, lower scores in Quality of Life (15th) and Finances (4th) pushed down the country’s overall performance.
Key Factors
- Highest score among all countries for air quality
- Top ten scores for interest rates and bank non-performing loans
- Better finishes in both health expenditure per capita and insurance health expenditure lift Health sub-index score
- Weaker performances in happiness and environmental factors indicators
Canada moves up one spot in to finish eighth overall after breaking into the top 10 in 2018. Its improved score is due to gains in the Material Wellbeing and Health sub-indices.
Key Factors
- Higher scores for employment and income equality
- Impressive gains in the bank nonperforming loans and governance indicators, earning the highest score and seventh-highest scores, respectively
- Top 10 finishes in air quality and happiness indicators
Denmark nudges up one spot to 7th overall, fueled by better scores in Material Wellbeing and Finances. The country boasts the highest score among all countries for the Quality of Life sub-index.
Key Factors
- Better score for the employment indicator
- Improvements in bank nonperforming loans, interest rates and government indebtedness indicators
- Top 10 scores for happiness, air quality, environmental factors and biodiversity
Sweden drops two places in the rankings to sixth overall. It has lower scores in Finances, Quality of Life and Health sub-indices compared to last year but a higher score in Material Wellbeing. A main contributor to Sweden’s lower overall score is declines in two Quality of Life indicators.
Key Factors
- Environmental factors and happiness scores, while still in the top 10, decline from last year
- Slight improvements in health expenditure per capita and life expectancy, but not enough to offset a lower score for life expectancy
- Higher score for the employment indicator but lower scores for both income equality and income per capita
For the third year in a row, New Zealand finishes 5th. The country finishes in the top 10 in both the Finances and Quality of Life sub-indices, but its overall score slips slightly from last year due to lower scores in all four sub-indices.
Key Factors
- 2nd overall in Finance, with top 10 finishes in the governance, bank nonperforming loans and government indebtedness indicators
- Top 10 finishes in air quality, happiness and environmental factors
- Weaker scores for both health expenditure per capita and insured health expenditure indicators
Ireland jumps three spot to fourth overall after breaking into the Top 10 last year. Improvements in the Health and Finances sub-indices boosts its overall score. Material Wellbeing is Ireland’s only sub-index not ranking in the top 10.
Key Factors
- Higher scores for bank nonperforming loans and government indebtedness, and a top 10 finish for the tax pressure indicator
- Slightly lower scores for environmental factors and happiness are balances by a top 10 finish in the air quality indicator
- Ireland climbs to fifth overall in the income per capita indicator
Norway remains third place overall with a slightly lower score than last year. Norway improves its score in the Health sub-index by being the only country in the GRI to achieve a top 10 finish in all three indicators. The country registered score declines in the Quality of Life, Material Wellbeing and Finances sub-indices.
Key Factors
- Top 10 finishes in happiness, environmental factors and air quality indicators
- Lower scores for the income equality and income per capita indicators, balanced by an improvement in the employment indicator
- Improvements in life expectancy and insured health expenditure indicators
Switzerland drops one spot from last year to second overall. It has the distinction of being the only country in the GRI with top 10 finishes in all four sub-indices, while lower scores in three sub-indices contributed to its decline in overall score.
Key Factors
- Highest score for the environmental factors indicator
- Top 10 for governance and bank nonperforming loans, while score for the tax pressure, old-age dependency and governance indicators drop
- Second place finish in both the life expectancy and health expenditure per capita indicators
Iceland continued its rise in the rankings topping the GRI, up one spot from last year. While registering a lower overall score than last year, it grabs the top spot because Switzerland, last year’s winner, registered a larger score decline. The country improved its scores in both the Finance and Health sub-indices, while lower scores in Material Wellbeing and Quality of Life contribute to the country’s lower overall score.
Key Factors
- Top 10 finishes in the happiness, environmental factors and air quality indicators
- Iceland breaks into the top 10 in the Finances sub-index, with all indicators except for tax pressure and old-age dependency improving
- Strides made in health expenditure per capita and insured health expenditure indicators
Download Slideshow for an in-depth look at the top 10 countries for retirement security.
Discover where your country ranks
Ranking
from 1 to 44
Score
Subindices
2019
2018
2017
Health
Quality of Life
Material Wellbeing
Finances in Retirement
Iceland
1
2019
2
2018
3
2017
83%
2019
84%
2018
82%
2019
85%
85%
84%
86%
88%
88%
91%
93%
88%
72%
71%
70%
Switzerland
2
2019
1
2018
2
2017
83%
2019
84%
2018
84%
2017
88%
87%
87%
91%
92%
92%
78%
80%
81%
77%
78%
77%
Norway
3
2019
3
2018
1
2017
80%
2019
81%
2018
86%
2017
90%
90%
89%
90%
92%
92%
86%
87%
91%
59%
60%
73%
Ireland
4
2019
7
2018
14
2017
78%
2019
77%
2018
74%
2017
87%
82%
82%
83%
83%
83%
71%
73%
64%
72%
71%
71%
Netherlands
11
2019
10
2018
9
2017
76%
2019
76%
2018
77%
2017
87%
90%
89%
82%
83%
81%
82%
80%
75%
57%
58%
64%
New Zealand
5
2019
5
2018
5
2017
78%
2019
78%
2018
80%
2017
83%
85%
85%
89%
90%
91%
62%
63%
66%
79%
79%
79%
Australia
9
2019
6
2018
6
2017
77%
2020
78%
2018
78%
2017
85%
85%
85%
81%
83%
84%
66%
66%
66%
77%
78%
77%
Canada
8
2019
9
2018
11
2017
77%
2019
77%
2018
76%
2017
87%
87%
87%
82%
83%
81%
68%
65%
65%
73%
74%
73%
Denmark
7
2019
8
2018
8
2017
77%
2019
77%
2018
77%
2017
85%
85%
84%
93%
94%
94%
75%
74%
75%
60%
59%
59%
Germany
13
2019
13
2018
7
2017
75%
2019
75%
2018
77%
2017
85%
86%
86%
82%
83%
82%
79%
79%
76%
56%
57%
66%
Sweden
6
2019
4
2018
4
2017
77%
2019
78%
2018
80%
2017
88%
89%
88%
89%
90%
91%
72%
71%
75%
65%
67%
69%
Austria
15
2019
14
2018
13
2017
74%
2019
74%
2018
75%
2017
84%
86%
85%
87%
87%
86%
75%
76%
77%
54%
54%
54%
Luxembourg
10
2019
11
2018
10
2017
76%
2019
76%
2018
76%
2017
91%
92%
92%
83%
80%
77%
74%
73%
77%
60%
62%
62%
Czech Republic
14
2019
15
2018
16
2017
75%
2019
74%
2018
72%
2017
72%
72%
70%
75%
75%
75%
83%
82%
76%
69%
69%
69%
Finland
12
2019
12
2018
12
2017
75%
2019
75%
2018
76%
2017
83%
81%
81%
92%
93%
92%
68%
69%
68%
62%
63%
65%
United States
18
2019
16
2018
17
2017
72%
2019
73%
2018
72%
2017
86%
86%
87%
76%
77%
78%
56%
61%
57%
71%
72%
71%
United Kingdom
17
2019
17
2018
18
2017
72%
2019
73%
2018
72%
2017
83%
83%
83%
85%
83%
81%
69%
71%
68%
56%
57%
58%
Israel
16
2019
19
2018
20
2017
73%
2019
72%
2018
71%
2017
79%
76%
76%
77%
78%
79%
66%
63%
61%
70%
71%
70%
Slovenia
19
2019
23
2018
24
2017
71%
2019
70%
2018
68%
2017
79%
79%
78%
71%
68%
66%
72%
69%
66%
65%
65%
64%
Malta
20
2019
20
2018
21
2017
71%
2019
71%
2018
70%
2017
75%
77%
77%
68%
69%
68%
76%
73%
72%
66%
67%
65%
Belgium
21
2019
18
2018
15
2017
71%
2019
73%
2018
73%
2017
83%
83%
82%
80%
80%
78%
73%
71%
70%
51%
59%
62%
Korea, Republic
24
2019
24
2018
23
2017
68%
2019
69%
2018
68%
2017
72%
72%
73%
53%
54%
53%
74%
75%
75%
75%
76%
76%
Japan
23
2019
22
2019
22
2017
70%
2019
70%
2018
70%
2017
90%
88%
88%
68%
68%
65%
72%
75%
74%
55%
55%
56%
Estonia
26
2019
27
2018
26
2017
67%
2019
65%
2018
65%
2017
65%
62%
63%
69%
65%
64%
62%
57%
58%
71%
75%
74%
France
22
2019
21
2018
19
2017
70%
2019
70%
2018
71%
2017
89%
90%
90%
81%
80%
79%
61%
60%
61%
55%
57%
61%
Russian Federation
38
2019
38
2018
40
2017
48%
2019
46%
2018
45%
2017
40%
37%
36%
54%
56%
58%
52%
52%
47%
47%
43%
41%
China
39
2019
40
2018
38
2017
45%
2019
45%
2018
50%
2017
49%
47%
47%
40%
39%
41%
32%
32%
49%
69%
69%
66%
Brazil
43
2019
43
2018
42
2017
39%
2019
38%
2018
41%
2017
55%
54%
52%
75%
77%
82%
10%
9%
12%
56%
55%
57%
India
44
2019
44
2018
44
2017
12%
2019
11%
2018
12%
2017
3%
3%
3%
5%
6%
7%
16%
16%
17%
60%
56%
53%
Singapore
28
2019
28
2018
27
2017
64%
2019
63%
2018
64%
2017
77%
69%
70%
52%
54%
60%
52%
53%
51%
79%
79%
79%
Italy
30
2019
29
2018
29
2017
63%
2019
63%
2018
63%
2017
81%
83%
82%
73%
70%
69%
51%
51%
52%
53%
52%
53%
Spain
31
2019
31
2018
33
2018
63%
2019
61%
2018
57%
2017
81%
81%
81%
77%
76%
77%
40%
36%
27%
63%
64%
63%
Mexico
37
2019
37
2018
37
2017
56%
2019
52%
2018
52%
2017
45%
52%
51%
58%
58%
57%
41%
42%
30%
64%
64%
66%
Colombia
42
2019
41
2018
41
2017
40%
2019
42%
2018
41%
2017
57%
49%
49%
62%
59%
61%
19%
11%
11%
65%
65%
67%
Portugal
29
2019
32
2018
32
2017
64%
2019
61%
2018
58%
2017
75%
75%
74%
60%
54%
53%
55%
51%
47%
61%
61%
62%
Poland
27
2019
26
2018
28
2017
66%
2019
65%
2018
64%
2017
63%
63%
62%
65%
56%
65%
68%
66%
60%
66%
68%
69%
Slovak Republic
25
2019
25
2018
25
2017
67%
2019
66%
2018
66%
2017
64%
65%
65%
69%
69%
71%
68%
64%
60%
67%
68%
68%
Cyprus
33
2019
36
2018
35
2017
61%
2019
56%
2018
54%
2017
65%
62%
62%
60%
56%
60%
52%
49%
44%
59%
53%
52%
Hungary
32
2019
30
2018
30
2017
62%
2019
62%
2018
59%
2017
58%
59%
60%
51%
48%
54%
70%
70%
70%
60%
60%
60%
Chile
36
2019
34
2018
36
2017
57%
2019
58%
2018
54%
2017
66%
64%
69%
63%
64%
77%
29%
30%
21%
76%
78%
78%
Lithuania
34
2019
33
2018
31
2017
60%
2019
60%
2018
58%
2018
53%
55%
53%
60%
57%
67%
51%
50%
48%
68%
69%
68%
Latvia
35
2019
35
2018
34
2017
57%
2019
57%
2018
57%
2017
49%
45%
46%
57%
56%
69%
49%
49%
48%
66%
69%
68%
Greece
41
2019
42
2018
43
2017
40%
2019
40%
2018
40%
2017
70%
70%
70%
52%
52%
52%
14%
14%
14%
45%
46%
49%
Turkey
40
2019
39
2018
39
2017
44%
2019
45%
2018
45%
2017
54%
53%
53%
37%
38%
37%
34%
36%
39%
45%
47%
53%
What is the
Global Retirement Index?
The Global Retirement Index (GRI) is a multi-dimensional index developed by Natixis Investment Managers and CoreData Research to examine the factors that drive retirement security and to provide a comparison tool for best practices in retirement policy.
The GRI includes International Monetary Fund (IMF) advanced economies, members of the Organization for Economic Cooperation and Development (OECD) and the BRIC countries (Brazil, Russia, India and China). We’ve calculated a mean score for each category and combined the category scores for a final overall ranking of the 44 nations studied.
3 critical threats to global retirement security
Retirement policy makers, pension and plan sponsors, and individuals around the globe face significant risks – from the viability of providing retirement benefits to the financial risks individuals are forced to assume in retirement saving and the ability of public and private institutions to deliver benefits over the long term. The 2019 Global Retirement Index reveals three critical threats.
1
Interest ratesLow rates may stimulate borrowing, but they also present a significant hurdle for those saving for retirement and those looking to generate income. Individual investors also expect a hefty 11.7% average return from their investments.1 Institutional investors say 6.7% is more realistic.2
What do we need from stocks to achieve return expectations?
| Individual Investors’ Return Expectations | ||
|---|---|---|
| Stocks | Bonds | Equity return to reach 11.7% |
| Percentage Mix | ||
| 30% | 70% | 32.2% |
| 35% | 65% | 28.8% |
| 40% | 60% | 25.5% |
| 45% | 55% | 22.9% |
| 50% | 50% | 20.9% |
| 55% | 45% | 19.2% |
| 60% | 40% | 17.8% |
| 65% | 35% | 16.7% |
| 30% | 70% | 32.2% |
| 70% | 30% | 15.6% |
Source: Natixis Investment Strategies Group; based on assumed bond return of 2.52% (Bloomberg Barclays US Aggregate Bond Index as of July 2019)
Performance data shown is based on past performance and is no guarantee of, and not necessarily indicative of, future results.
2
DemographicsRapidly aging populations pose one of the biggest risks to pension planning, but longevity also represents a key risk for retirees. Old-age dependency is a critical factor for retirement security.
Old-age dependency is the ratio of people over the age of 65 to the working-age population, age 15–65. It illustrates how many people are putting money into the system, compared to the number likely to take money out. Why does old-age dependency matter? For example, it raises key questions about pensions. Will institutions be able to pay out pensions? Will retirees find that their pensions are cut because they’re underfunded? Old-age dependency can also have implications for policy, taxes, and retirement benefits.
And this may be most important for Generation Z. UN projections show that individuals in developed regions who reach age 65 in 2015 will live an average of 19 more years.3 By 2065, Generation Z retirees should plan for living another 24 years in retirement and current systems will be challenged to keep up.
Things will look very different for
When they were born
2000
When they'll retire
2070
6,143,493,823
10,459,152,507
6.9%
18.9%
Source: United Nations. World Population Prospects 2019. Statista. https://population.un.org/wpp/
3
Climate changeA long-term risk to global sustainability presents an immediate financial risk today. While the risk of climate change is often viewed through a long-term lens, today it presents tangible health and financial risks to millions of retirees that will challenge policy makers around the world.
The realities of retiring to the beach
While retiring to the beach can be idyllic, the consequences of climate change mean retirees may also face some very real – and daunting – financial challenges. These risks not only affect individuals, as climate change can have costly impacts for policy makers as well.
How does climate change impact the cost of healthcare?
•
How could rising sea levels affect commercial and residential assets?
•
Can the existing coastal infrastructure survive intense storm damage?
Individuals
255K
additional deaths per year between 2030 and 2050 due to climate change – household air and ambient air pollution cause 4.3 and 3 million deaths per year, respectively4
$160B
in losses from natural catastrophes in 2018 – people in low and average income brackets may no longer be able to afford property insurance premiums5
40%
of the world’s population (2.4 billion people) live within 100km of the coast6
Policy Makers
$2-4B
in direct damage costs (i.e. excluding costs in health-determining sectors such as agriculture and water and sanitation) to health by 20307
226B
in commercial, industrial, road, rail and residential assets will be at risk from sea level rise alone by 2100 if greenhouse gas emissions continue at high levels8
$45B
given to US state and local governments to rebuild public infrastructure between 2005 and 2014 by the Federal Emergency Management Agency’s public assistance program9
Get more insight into these key threats, as well as detail on the how and why of country rankings.
2 Natixis Investment Managers Global Survey of Institutional Investors, conducted by CoreData Research October-November 2018. Survey included 500 respondents in 28 countries.
3 United Nations. World Population Prospects 2019. Statista. https://population.un.org/wpp/
4 World Health Organization. Climate change and health. (2018). https://www.who.int/news-room/fact-sheets/detail/climate-change-and-health
5 Nelson, Arthur. “Climate change could make insurance too expensive for most people – report.” The Guardian, March 21, 2019. https://www.theguardian.com/environment/2019/mar/21/climate-change-could-make-insurance-too-expensive-for-ordinary-people-report
6 United Nations. The Ocean Conference Fact Sheet: People and Oceans. (2017). https://www.un.org/sustainabledevelopment/wp-content/uploads/2017/05/Ocean-fact-sheet-package.pdf
7 World Health Organization. Climate change and health. (2018). https://www.who.int/news-room/fact-sheets/detail/climate-change-and-health
8 “Compound Costs: How Climate Change Is Damaging Australia’s Economy.” Climate Council of Australia. Updated May 14, 2019. https://www.climatecouncil.org.au/wp-content/uploads/2019/05/costs-of-climate-change-report-v3.pdf
9 “What We Don't Know About State Spending on Natural Disasters Could Cost Us.” Pew Trusts, June 19, 2018. https://www.pewtrusts.org/en/research-and-analysis/reports/2018/06/19/what-we-dont-know-about-state-spending-on-natural-disasters-could-cost-us
The views and opinions expressed may change based on market and other conditions. This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary.
All investing involves risk, including the risk of loss. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
Natixis Distribution, L.P. is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.
2659701.1.1
All back to bonds?
Global Corporate Bonds – Attractive Yields but Thin Risk Premium
2024 Fund Selector Outlook