《美世&CFA：2023全球養老金指數報告（英文版）（144頁）.pdf》由會員分享，可在線閱讀，更多相關《美世&CFA：2023全球養老金指數報告（英文版）（144頁）.pdf（144頁珍藏版）》請在三個皮匠報告上搜索。

1、Mercer CFA Institute Global Pension Index 20231Mercer CFA InstituteGlobal Pension Index 2023Feature chapter:The growing impact of AI on pension systems and their membersMercer CFA Institute Global Pension Index 20232ContentsMercer CFA Institute Global Pension Index 2023301.Mercer prefaceRetirement i

2、ncome systems around the world are under pressure as never before.Several factors are emerging that will affect the long-term efficacy of these systems.The demographic structure of most countries is changing significantly as birth rates continue to fall.This development has major consequences for pa

3、y-as-you-go pension arrangements,which rely on the next generation of taxpayers to fund the pensions paid to previous generations.Many governments will need to tackle the very tricky issues of reducing the benefits or increasing the eligibility age for these pensions.Inflation has also reemerged and

4、 has damaged the communitys confidence in the ability of pension programs to deliver adequate retirement benefits over the longer term.Although inflation may be falling in some economies,its reemergence has highlighted this risk to current and future retirees.At the same time,we are witnessing the o

5、ngoing global trend of moving from defined benefit(DB)to defined contribution(DC)arrangements,in which individuals carry all the risks relating to investment returns,inflation and,often,longevity.Very few systems have solved the dilemma of how to move from an individual-based DC accumulation system

6、to a postretirement system that provides adequate and secure income to retirees while also providing them with the same flexibility that was available during their working years.An ongoing challenge facing many pension systems is the inclusion of gig workers and those in the informal labor market.In

7、 many economies,the labor market is becoming fractured so that the stable or structured employeremployee relationship is disappearing.In such circumstances,the pension arrangements must become more individually focused and less reliant on third parties.Technology may be part of the answer to improvi

8、ng pension coverage,but this also requires strong government leadership.Planning for the long term is therefore more critical than ever.The Mercer CFA Institute Global Pension Index 2023 compares 47 retirement income systems with regard to adequacy,sustainability and integrity.Or,to put it another w

9、ay:What benefits are future retirees likely to receive?Can the existing systems continue to deliver,notwithstanding the demographic and financial challenges?Are the private pension plans regulated in a manner that encourages long-term community confidence?Mercer CFA Institute Global Pension Index 20

10、234The primary objective of the research covered by this report is to benchmark each retirement income system using more than 50 indicators.An important secondary purpose is to highlight some shortcomings in each system and to suggest areas of reform that would provide more adequate retirement benef

11、its,increased sustainability and greater community trust in the pension system.These include:Increasing the coverage of many private pension systems Encouraging people to work a little longer Increasing the level of funding set aside for retirement Reducing leakage from the system before retirement

12、Improving disclosure and transparency to pension plan members This years report also tackles an emerging technological development that will affect everyone the impact of artificial intelligence(AI)on pension systems and their members.Although there are many aspects of this development,AI will affec

13、t the operations of pension systems around the world.It has the potential to greatly improve the member experience as well as members retirement outcomes.However,it is not without significant challenges and risks,some of which are explored in Chapter 4.I am delighted to recognize CFA Institute as ou

14、r major sponsor and sincerely thank the Institute for its enthusiasm and participation.The Index is a real partnership between two respected global organizations.I would also like to thank the members of our Advisory Board,established by the Monash Centre for Financial Studies,for their continued in

15、volvement and valuable insights.Finally,I am very grateful to the Mercer consultants and our other correspondents around the world who have been invaluable in providing information about their retirement income systems and checking our interpretation of the data.We also appreciate the support of the

16、 Finnish Centre for Pensions,the Icelandic Pension Funds Association,the Association of Pension Funds Management Companies and Pension Insurance Companies in Croatia,and the Unified Accumulative Pension Fund of Kazakhstan.We hope you enjoy reading this report and that it continues to encourage pensi

17、on reform to improve the provision of financial security for all retirees.Dr.David Knox AMLead author and Senior Partner,MercerMercer CFA Institute Global Pension Index 20235Mercer CFA Institute Global Pension Index 20235CFA Institute is honored to sponsor the Mercer CFA Institute Global Pension Ind

18、ex and to again collaborate with Mercer and the Monash Centre for Financial Studies to continue to develop and distribute this important research on a topic of significant importance around the world.We at CFA Institute believe an urgency exists to address the very real challenges that persist throu

19、ghout the globe in relation to pensions.Each year,this index serves as a critical reminder that there is a long way to go in many jurisdictions to make pension schemes function at their best and for the long-term financial security of beneficiaries.Pension systems and retirement plans also serve as

20、vital aspects of the capital markets,and yet the effectiveness of these systems varies significantly.The average age of populations around the world continues to rise,particularly in more mature markets.Mounting inflation and rising interest rates have created a new market dynamic that poses signifi

21、cant challenges to pension plans.And we see continued fracturing as it relates to deglobalization.These are just a few of the increasingly complex challenges pension funds face,which,in turn,impact the end-beneficiaries in significant ways.More and more often,it is becoming evident that individuals

22、will have an increasingly important role to play regarding their own retirement.We as investment professionals need to help them prepare for that inevitability.This year,the report also examines important technological advances that are creating opportunities,as well as new challenges,throughout the

23、 financial services industry:namely,artificial intelligence as one example.The potential impact of AI on the pensions industry is likely to be widespread.It may unlock 01.CFA Institute prefaceand enable capabilities that end-beneficiaries will benefit from,and it may optimize the role of investment

24、professionals who are investing on their behalf.Much remains to be seen as to understanding the nature and the scale of the impact AI will have,but we are committed to helping the industry understand these developments as they unfold.Research such as this report contributes to that goal.At CFA Insti

25、tute,we hold ethics at the center of all we do.The same is true of working with AI in the investment industry.While we are learning how to integrate AI into our processes,we must consider each decision through an ethical lens.Humans will continue to play a critical role in the investment industry,pr

26、oviding oversight and application for AI technologies.We believe the combination of human intelligence and artificial intelligence will benefit our industry as a whole.On behalf of our organization,I would like to extend our thanks to Dr.David Knox of Mercer and the entire Mercer team who work tirel

27、essly on the Mercer CFA Institute Global Pension Index every year.We also thank the Monash Centre for Financial Studies for their continued dedication to the accuracy of the Index.We know this requires an immense amount of work each year;however,the benefits of examining pension schemes on a global

28、scale remain hugely valuable for the betterment of this industry.Margaret Franklin,CFA President and CEO,CFA InstituteMercer CFA Institute Global Pension Index 20236The provision of financial security in retirement is critical for both individuals and societies as most countries are now grappling wi

29、th the social,economic and financial effects of aging populations.As the World Economic Forum has noted:“For the first time in human history,people aged 65 and over outnumber children aged five or younger.”102.Executive summaryMercer CFA Institute Global Pension Index 20237In the post-pandemic world

30、,retirees are also facing increasing risks with the reemergence of inflation and rising interest rates,which increase the cost of existing government debt and therefore the ability of some governments to continue with their current level of services.In addition,there is growing geopolitical uncertai

31、nty,which inevitably affects investment returns.As the OECD notes:“The current financial and economic uncertainty as well as the rising cost of living may lead policy makers,regulators and supervisors to postpone reforms that could improve their pension systems.However,delaying needed reforms would

32、put at risk the well-being of current and future pensioners.”2 Within this context of uncertainties and long-term challenges,a comparison of the different pension systems around the world can be invaluable for policymakers,governments and the pension industry itself.Yet such a comparison is not stra

33、ightforward.As the OECD comments:“Retirement-income regimes are diverse and often involve a number of different programmes.”3 Any comparative ranking of systems is likely to be controversial as each system has evolved from particular economic,social,cultural,political and historical circumstances.Th

34、is means there is no single system that can be transplanted from one country and applied,without change,to another.However,certain features and characteristics are likely to lead to improved financial benefits for the older members of society,an increased likelihood of future sustainability of the s

35、ystem,and a greater level of community trust and confidence.With these desirable outcomes in mind,the Mercer CFA Institute Global Pension Index(the Index)uses three sub-indices adequacy,sustainability and integrity to measure each retirement income system against more than 50 indicators.The followin

36、g diagram highlights some of the topics covered in each sub-index.02.Executive summary|Figure 1.Calculating the Mercer CFA Institute Global Pension Index40%Mercer CFA Institute Global Pension IndexIndicatorsincludingSub-index35%25%Benefits System design Savings Government support Home ownership Grow

37、th assets Pension coverage Total assets Demography Public expenditure Government debt Economic growth Regulation Governance Protection Communication Operating costsAdequacySustainabilityIntegrityMercer CFA Institute Global Pension Index 20238The overall index value for each system represents the wei

38、ghted average of the three sub-indices.The weightings used are 40%for the adequacy sub-index,35%for the sustainability sub-index and 25%for the integrity sub-index.These have remained unchanged since the first Index was published in 2009.The different weightings used reflect the primary importance o

39、f the adequacy sub-index,which represents the benefits provided,together with some important system design features.The sustainability sub-index has a focus on the future and uses various indicators that will influence the likelihood that the current system will be able to provide benefits in the fu

40、ture.The integrity sub-index includes many legislative requirements that influence the overall governance and operations of the system,which affect the level of confidence that the citizens of each country have in their system.With the inclusion of Botswana,Croatia and Kazakhstan in 2023,this study

41、now includes 47 retirement income systems,representing 64%of the worlds population.This demonstrates the great diversity between the systems around the world,with the index scores ranging from 42.3 for Argentina to 85.0 for the Netherlands.02.Executive summary|*In this report,“China”refers to the pe

42、nsion system in mainland China.The results for Hong Kong SAR and China Taiwan are shown separately as they have different pension systems.Mercer CFA Institute Global Pension Index 20239Figure 2.Summary of the 2023 results02.Executive summary|This years resultsGradeIndex valueSystemsDescriptionA80Net

43、herlandsIcelandDenmarkIsraelA first-class and robust retirement income system that delivers good benefits,is sustainable and has a high level of integrityB+7580AustraliaFinlandSingaporeA system that has a sound structure,with many good features but has some areas for improvement that differentiate i

44、t from an A-grade systemB6575NorwaySwedenUKSwitzerlandCanadaIreland Chile Uruguay BelgiumNew ZealandPortugalGermanyC+6065KazakhstanHong Kong SARUSUAEColombiaFranceSpainCroatiaA system that has some good features but also has major risks and/or shortcomings that should be addressed;without these impr

45、ovements,its efficacy and/or long-term sustainability can be questionedC5060Saudi ArabiaPolandJapanItalyMalaysiaBrazilPeru China*MexicoBotswanaSouth AfricaChina TaiwanAustriaIndonesiaKorea(South)D3550ThailandTurkeyIndiaPhilippinesArgentinaA system that has some desirable features but also has major

46、weaknesses and/or omissions that need to be addressed;without these improvements,its efficacy and sustainability are in doubtE35NilA poor system that may be in the early stages of development or nonexistentMercer CFA Institute Global Pension Index 202310This study shows that the Netherlands,Iceland,

47、Denmark and Israel have the best systems,each of them receiving an A grade in 2023.Although the Netherlands is currently undertaking significant pension reform,moving from a mostly collective benefit structure to a more individual DC approach,its system has received the highest index value in 2023.T

48、he reason for this rating is that,notwithstanding these changes,the system will continue to provide very good benefits,supported by a strong asset base and very sound regulation.No system in this years Index is an E-grade system,which would be represented by an index value below 35.A score between 3

49、5 and 50,representing a D-grade system,indicates a system that has some sound features but also major omissions or weaknesses.A D-grade classification may also occur in the relatively early stages of the development of a particular retirement income system.Figure 3 below shows the overall index valu

50、e for each system,together with the index value for each of the three sub-indices:adequacy,sustainability and integrity.Each index value represents a score between 0 and 100.Figure 3.Overall index value for each system,including the three sub-indicesSystemOverall index valueSub-index valuesAdequacyS

51、ustainabilityIntegrityArgentina 42.3 56.3 29.5 37.8 Australia 77.3 70.7 78.4 86.1 Austria 52.5 66.8 22.6 71.6 Belgium 68.6 82.0 39.4 88.2 Botswana54.539.852.880.6 Brazil 55.7 70.4 28.5 70.1 Canada 70.2 71.1 64.5 76.7 Chile 69.9 60.0 71.3 84.0 China55.3 64.239.0 63.7 Colombia 61.9 62.9 55.4 69.3 Croa

52、tia60.357.1 56.0 71.4 Denmark 81.3 82.5 82.5 77.8 02.Executive summary|Mercer CFA Institute Global Pension Index 202311SystemOverall index valueSub-index valuesAdequacySustainabilityIntegrityFinland 76.6 77.4 65.6 90.9 France 61.7 84.5 40.9 54.4 Germany 66.8 79.8 45.3 76.3 Hong Kong SAR 64.0 51.9 61

53、.1 87.6 Iceland83.5 85.5 83.8 80.0 India 45.941.9 43.0 56.5 Indonesia 51.8 41.6 50.6 69.8 Ireland 70.2 77.154.4 81.1 Israel 80.8 77.0 82.7 84.4 Italy 56.3 72.7 23.7 75.9 Japan 56.3 59.2 46.5 65.6 Kazakhstan64.9 46.9 74.8 80.0 Korea(South)51.2 39.0 52.768.5 Malaysia 56.0 44.3 56.1 74.6 Mexico 55.1 63

54、.5 58.4 37.0 Netherlands 85.0 85.6 82.4 87.7 New Zealand 68.3 65.6 64.3 78.3 Norway 74.4 79.4 59.1 87.8 Peru 55.5 55.0 50.4 63.5 Philippines 45.2 41.8 63.2 25.7 Poland 57.6 59.8 45.4 71.2 02.Executive summary|Mercer CFA Institute Global Pension Index 202312SystemOverall index valueSub-index valuesAd

55、equacySustainabilityIntegrityPortugal67.4 86.7 32.0 85.9 Saudi Arabia 59.5 61.5 54.9 62.9 Singapore 76.3 79.8 71.6 77.0 South Africa 54.0 44.2 49.1 76.6 Spain 61.6 79.7 28.5 79.2 Sweden 74.0 72.1 75.6 75.0 Switzerland 72.0 69.6 70.6 77.9 China Taiwan53.6 47.6 52.9 64.1 Thailand 46.4 45.4 42.2 53.9 T

56、urkey46.3 46.5 31.1 67.3 UAE62.5 72.2 45.4 70.8 UK 73.0 77.3 62.7 80.6 Uruguay68.9 84.0 46.2 76.5 US 63.0 66.7 61.1 59.5 Average62.9 64.8 54.271.9 Each overall index value takes into account more than 50 indicators,some of which are based on data measurements that can be difficult to compare between

57、 countries.For this reason,when the difference in the overall index value is less than two or three points,a definitive statement that one system is better than another should be avoided.On the other hand,when the difference is five or more,it can be fairly concluded that the higher index value indi

58、cates a better retirement income system.02.Executive summary|Mercer CFA Institute Global Pension Index 202313Figure 4 below shows the grade for each systems sub-index values as well as the overall grade.This approach highlights the fact that some systems may have a weakness in one area(for example,s

59、ustainability)while being much stronger in the other two areas.Such a weakness highlights areas for future reforms.Figure 4.Overall index grades for each system,including the three sub-indicesSystemOverall index valueSub-index gradesAdequacySustainabilityIntegrityArgentina DCEDAustralia B+BB+AAustri

60、a CBEBBelgium BADABotswanaCDCABrazil CBEBCanada BBC+B+Chile BC+BAChina CC+DC+Colombia C+C+CBCroatiaC+CCBDenmark AAAB+Finland B+B+BAFrance C+ADCGermany BB+DB+Hong Kong SAR C+CC+A02.Executive summary|Mercer CFA Institute Global Pension Index 202314SystemOverall index valueSub-index gradesAdequacySusta

61、inabilityIntegrityIceland AAAAIndia DDDCIndonesia CDCBIreland BB+CAIsrael AB+AAItaly CBEB+Japan CCDBKazakhstanC+DBAKorea(South)CDCBMalaysia CDCBMexico CC+CDNetherlands AAAANew Zealand BBC+B+Norway BB+CAPeru CCCC+Philippines DDC+EPoland CCDBPortugalBAEASaudi Arabia CC+CC+Singapore B+B+BB+02.Executive

62、 summary|Mercer CFA Institute Global Pension Index 20231501.Executive summary|SystemOverall index valueSub-index gradesAdequacySustainabilityIntegritySouth Africa CDDB+Spain C+B+EB+Sweden BBB+B+Switzerland BBBB+China TaiwanCDCC+Thailand DDDCTurkeyDDEBUAE C+BDBUK BB+C+AUruguay BADB+US C+BC+CMercer CF

63、A Institute Global Pension Index 202316Chapter 5 makes several suggestions to improve each retirement income system.Although each system reflects a unique history,there are some common themes for improvement as many systems face similar problems in the decades ahead.Significant pension reform is nev

64、er easy,but an important starting point is to express the objectives of the overall system.As van Popta and Steenbeek note:“The objective of pension reform must be crystal clear and the perspectives of all stakeholders consumers,employers,government,industry must be addressed.”4 As the recent review

65、 into Australias retirement income system commented:“An agreed objective is needed to anchor the direction of policy settings,help ensure the purpose of the system is understood and provide a framework for assessing the performance of the system.”5 The World Economic Forum highlighted the three key

66、areas that will have the biggest impact on the overall level of financial security in retirement.Each of these factors is critical,and each has been highlighted within the adequacy or sustainability sub-indices.These were to:1 Provide a“safety net”pension for all2 Improve ease of access to well-mana

67、ged,cost-effective retirement plans3 Support initiatives to increase contribution rates6A range of reforms that can be implemented to improve the long-term outcomes from our retirement income systems include:Increasing coverage of employees(including nonstandard workers)and the self-employed in the

68、private pension system,recognizing that many individuals will not save for the future without an element of compulsion or automatic enrollment Increasing the state pension age and/or retirement age to reflect increasing health-adjusted life expectancy,both now and into the future,thereby reducing th

69、e costs of publicly financed pension benefits7 Promoting higher labor force participation at older ages,which will increase the savings available for retirement and limit the continuing increase in the length of retirement Encouraging higher levels of private saving,both within and beyond the pensio

70、n system,to reduce the future dependence on the public pension while also adjusting the expectations of many workers Introducing measures to reduce the gender pension gap and gaps that exist for minority groups in many retirement income systems Reducing the leakage from the retirement savings system

71、 prior to retirement,thereby ensuring that the funds saved,often with associated taxation support,are used for the provision of retirement income Improving the governance of private pension plans and introducing greater transparency to improve the confidence of plan membersOverall recommendations02.

72、Executive summary|Mercer CFA Institute Global Pension Index 202317The structure and characteristics of pension systems around the world exhibit great diversity,with a wide range of features and norms.Comparisons are not straightforward.In addition,the lack of readily available and comparable data re

73、lating to many systems provides additional challenges for such a comparison.Therefore,this report uses a variety of data sources,drawing on publicly available data wherever possible.03.Background to the IndexMercer CFA Institute Global Pension Index 202317Mercer CFA Institute Global Pension Index 20

74、231803.Background to the Index|These challenges of data and benchmarking should not,however,prevent the comparison of retirement income systems.Within the context of our aging populations and current economic conditions,it is too important to ignore.Furthermore,programs,policies and practices adopte

75、d in some retirement income systems provide valuable lessons,experience or ideas for the development or reform of other systems.This 15th edition of the Index compares 47 retirement income systems,highlighting both the considerable diversity and the positive features of many systems.Notwithstanding

76、these highlights,the study also confirms that no pension system is perfect and that every system has some shortcomings.In Chapter 5,we make suggestions to improve the efficacy of each retirement income system.This study acts as a reference for governments and policymakers around the world as they re

77、view retirement income systems and so improve the outcomes for future retirees.In its influential report Averting the Old Age Crisis,the World Bank8 recommended a multipillar system for the provision of old-age income security,comprising:Pillar 1:A mandatory,publicly managed,tax-financed public pens

78、ion Pillar 2:Mandatory,privately managed,fully funded benefits Pillar 3:Voluntary,privately managed,fully funded personal savingsSubsequently,the World Banks Pension Conceptual Framework9 extended this three-pillar system to the following five-pillar approach:Zero pillar:A non-contributory basic pen

79、sion from public finances to deal explicitly with the poverty-alleviation objective First pillar:A mandated public pension plan with contributions linked to earnings,with the objective of replacing some preretirement income Second pillar:Typically,mandated DC,with individual accounts in occupational

80、 or personal pension plans with financial assets Third pillar:Voluntary and fully funded occupational or personal pension plans with financial assets that can provide some flexibility when compared to mandatory schemes Fourth pillar:A voluntary system outside the pension system with access to a rang

81、e of financial and nonfinancial assets and informal support,such as family,healthcare and housingThe World Bank noted that multipillar designs provide more flexibility than single pillars in meeting the core objectives of pension systems;namely,protection against the risk of poverty in old age and s

82、moothing some consumption from ones work life into retirement.Sangho Kim has recently added that:“To mitigate problems connected with unfunded public pension schemes,multipillar systems for incomes in retirement need to be reinforced.”10 Mercer CFA Institute Global Pension Index 202319Figure 5.The W

83、orld Bank Pension Conceptual Framework This five-pillar approach provides a good basis for comparing retirement income systems around the world.Hence,the range of indicators used in this report considers features or results associated with each pillar.The International Labour Organization also suppo

84、rts the concept of a multipillar pension system,noting“the possibility of combining a set of social protection instruments,each of which plays one or more functions,to guarantee the whole range of objectives of a national pension system.”11 Their four pillars are similar to Pillars 03 of the World B

85、anks framework.In contrast to the World Bank,the OECD adopts a three-tier system,12 namely:Tier 1:A universal or targeted pension Tier 2:A mandatory savings system,provided by either the public or private sector Tier 3:A voluntary savings system in the private sectorThe ARC Centre of Excellence in P

86、opulation Ageing Research suggests that the first tier is primarily a safety net designed for those unable to provide for themselves.13 On the other hand,the second tier represents some consumption smoothing from a persons working years to the retirement years.The third tier is voluntary and enables

87、 some households to save more than required under the mandatory system.Although this three-tier approach clarifies the different roles for each type of pension,the Index continues to include non-pension factors,such as home ownership,non-pension savings and household debt,which can have a significan

88、t influence on financial security during retirement.That is,an individuals financial wellness in retirement does not depend solely on government and employment-related pensions.The“best”system for a particular country at a particular time must also consider that countrys economic,social,cultural,pol

89、itical and historical context.In addition,regulatory philosophies vary over time and between countries.No pension system is perfect for every country at the same time.Its not that simple.However,some characteristics of all pension systems can be tested or compared to give us a better understanding o

90、f how each system is tackling the provision of retirement income.Since its inception,the Index has grouped these desirable characteristics into adequacy,sustainability and integrity.A basic public pension that provides a minimal level of protectionA public,mandatory and contributory system linked to

91、 earningsA private,mandatory and fully funded systemA voluntary and fully funded systemPillar 0Pillar 1Pillar 2The multipillar approachPillar 3Financial and nonfinancial support outside formal pension arrangementsPillar 403.Background to the Index|Mercer CFA Institute Global Pension Index 202320Taxa

92、tion support Are voluntary member contributions made by a full-time earner on the median income to a funded pension plan treated more favorably by the tax system than similar savings in a bank account?Is the investment income earned by the pension plan exempt from tax in the preretirement and/or pos

93、tretirement periods?The first question assesses whether the government provides any incentives to encourage average-income earners to save for retirement.It is recognized that the taxation treatment of pensions varies greatly around the world,so this question assesses whether an incentive exists or

94、not,not the value of the concession.The second question recognizes that the level of investment earnings is critical,especially for DC plans.A tax on investment income reduces the compounding effect and will therefore reduce the adequacy of future benefits.The adequacy of benefits is perhaps the mos

95、t obvious way to compare different systems.After all,the primary objective of any pension system is to provide adequate retirement income.Hence,this sub-index considers the base(or safety-net)level of income provided by each system as well as the net replacement rate at income levels ranging from 50

96、%to 150%of the average wage.The net replacement rates use the OECD economic assumptions and allow for country-specific projections of mortality rates and the relevant retirement ages.Critical to the delivery of adequate benefits are the design features of the private pension system(that is,the Secon

97、d and Third Pillars).Although we could assess many features,we have considered the following six broad topics,each of which represents a feature that will improve the likelihood that adequate retirement benefits are provided.Retirement benefit designIs it a requirement to take part or all of the ret

98、irement benefit as an annuity or income stream for life?If so,are lump-sum benefits also available?In lump-sum-based schemes,are there any incentives or rules that encourage taking income streams?Many systems require lifetime annuities,whereas others provide lump-sum retirement benefits that are not

99、 necessarily converted into an income stream.A flexible hybrid arrangement probably delivers the best outcome for many retirees.SeparationUpon a couples divorce or separation,are the individuals accrued pension benefits normally considered in the overall division of assets?This question recognizes t

100、hat the financial treatment of accrued pension assets can have a major effect on the future financial security of one or both partners following a divorce or separation.Preservation Is there a minimum access age to receive benefits from private pension plans(except for death,ill health,disability an

101、d cases of significant financial hardship)?This question determines whether the private pension system permits the undesirable leakage of accumulated benefits from the system before retirement or whether the regulations are focused on the provision of benefits at and during retirement.Vesting and po

102、rtability Upon resignation from an employer,are plan members normally entitled to the full vesting of their accrued benefits?After resignation,is the value of the members accrued benefit normally maintained in real terms(either by inflation-linked indexation or through market investment returns)?Can

103、 a members benefit entitlements normally be transferred to another pension plan upon the members resignation from an employer?These questions focus on what happens to the individuals accrued benefit when they change employment.Traditionally,many private pension designs penalized resigning members,wh

104、ich,in turn,affected the level of benefits available at retirement.AdequacyContinued accrualIs it a requirement that individuals continue to accrue their retirement benefits when they receive income such as a disability pension or paid parental leave?Does the system provide any pension contributions

105、 or benefits for parents who are caring for young children while the parent is not in the paid workforce?These questions recognize that the adequacy of an individuals retirement income can be affected if there is no requirement for benefits to continue to accrue when a worker is temporarily out of t

106、he workforce;for example,due to parental leave,ill health,or disability or to care for young children.03.Background to the Index|Mercer CFA Institute Global Pension Index 202321In addition to these design issues,we consider savings from outside formal pension programs,highlighting the fact that,as t

107、he World Bank notes,the Fourth Pillar can play an important role in providing financial security in retirement.These indicators cover the rate of household savings,the level of household debt and the level of home ownership.This pillar also includes access to informal family support,but the extent o

108、f this support is difficult to measure in an objective manner.Finally,we recognize that the net investment return over the long term represents a critical factor in determining whether an adequate retirement benefit will be provided.This is particularly true given the increasing importance of DC pla

109、ns.Although investment and administrative costs are considered part of the integrity sub-index,the long-term return is likely to be affected by the types and diversity of assets held by the pension fund.Hence,the adequacy sub-index includes an indicator representing an assessment of the percentage o

110、f investments held in growth assets(including equities and property).03.Background to the Index|Mercer CFA Institute Global Pension Index 202322The long-term sustainability of the existing retirement income system is a concern in many countries,particularly in light of the aging population,the incre

111、asing old-age dependency ratio,the public expenditure on pensions,substantial government debt and rising inflation.Indeed,the World Bank notes that“most public pension schemes are not viable financially and cannot therefore keep their promises to younger cohorts that will retire in the future.”14 Th

112、is sub-index therefore brings together several measures that affect the sustainability of current programs.Although some demographic measures,such as the old-age dependency ratio(both now and in the future),are difficult to change,others,such as the state pension age,the opportunity for phased retir

113、ement and the labor force participation rate among older workers,can be influenced,either directly or indirectly,by government policy.An important feature of sustainability is the level of funding in advance,which is particularly important where the ratio of workers to retirees is declining.Hence,th

114、is sub-index considers contribution rates,the level of pension assets and the coverage of the private pension system.In addition,real economic growth over the long term has a significant impact on the sustainability of pensions as it affects employment,saving rates and investment returns.Given the g

115、rowing importance and impact of climate change and other global effects on future investment returns,the sub-index also explores the relevance of economic,social and governance(ESG)factors on the investment policies or strategies adopted within each system.Finally,given the key role the provision of

116、 a public pension plays in most systems,the levels of government debt and public pension expenditure represent important factors affecting a systems long-term sustainability and the future level of these pensions.Sustainability 03.Background to the Index|Mercer CFA Institute Global Pension Index 202

117、323The third sub-index considers the integrity of the overall pension system but with a focus on funded schemes that are normally found in the private sector.As most systems are relying on private pensions to play an increasingly important role in the provision of retirement income,it is critical th

118、at the community has confidence in the ability of private-sector pension providers to deliver retirement benefits over many years into the future.This sub-index therefore considers the role of regulation and governance,the protection provided to plan members from a range of risks and the level of co

119、mmunication provided to individuals.In each case,we consider the requirements set out in the relevant legislation and not the best practice delivered by some pension plans.In addition,the Worldwide Governance Indicators published by the World Bank are used to provide a broader perspective of governa

120、nce within each country.An important contributor to the long-term confidence of members is that they receive good value from their pension plans and that costs are kept to a reasonable level.Although an objective comparison of the total costs of operating each system is impractical,this sub-index in

121、cludes some proxy measures relating to industry structure and scale that should provide a good indication.Integrity 03.Background to the Index|Mercer CFA Institute Global Pension Index 202324In the construction of the Index,we have endeavored to be as objective as possible in calculating each system

122、s index value.Of course,we recognize that the Index is artificial,at least to some extent,as it does not calculate the pension that any retired individual will actually receive.Furthermore,it cannot recognize every aspect of a pension system,particularly the more subjective matters,such as community

123、 confidence.We also recognize that comparable international data are not available for every desirable feature.Nevertheless,where international data are available,we have used those data.In other cases,we have developed objective questions to obtain a better understanding of each systems operations

124、and outcomes.Some countries have more than one system,or different regulations exist in different parts of the country.Where this occurs,we have concentrated on the most common system or taken an average position.Each systems overall index value is calculated by taking 40%of the adequacy sub-index,3

125、5%of the sustainability sub-index and 25%of the integrity sub-index.These weightings have remained constant since the first edition of the Index in 2009.Although each sub-index is not weighted equally,the overall results are not materially impacted by the weightings;for example,re-weighting each sub

126、-index equally does not provide any significant changes to the results.Of course,the weighting of each indicator within each sub-index is subjective as there is no“correct”answer.Our approach has been to give higher weightings to the more important indicators.15 Living standards in retirement are al

127、so affected by several other factors,including the provision and costs of healthcare services and aged care,through both the public and private sectors.However,some of these factors can be difficult to measure within different systems and,in particular,difficult to compare.We therefore decided to co

128、ncentrate on indicators that directly affect the provision of financial security in retirement,both now and in the future.The Index does not claim to be a comprehensive measure of living standards in retirement;rather,it is focused on the provision of financial security in retirement.The constructio

129、n of the Index 03.Background to the Index|Mercer CFA Institute Global Pension Index 202325In 2022,we undertook a thorough review of the adequacy and sustainability sub-indices.This year,it was time to review the integrity sub-index.A review of the integrity sub-index04.Changes from 2022 to 2023Merce

130、r CFA Institute Global Pension Index 202325Mercer CFA Institute Global Pension Index 202326As private pension plans invest their members money for many decades,it is critical that the behavior of their staff are beyond reproach.Hence,we have added Questions 1 and 2,shown below.Further,with DC plans

131、becoming more prevalent around the world,it is essential that the plans investment strategy and performance be disclosed to plan members.This has led to the addition of Questions 3 and 4.1 Is it a requirement for the pension plan to have an anti-bribery and corruption policy?2 Is it a requirement fo

132、r the pension plan to have a code of personal conduct(or equivalent)for its trustees/fiduciaries,senior executives and employees?3 Are pension plans required to grant members access to information about their plans investment strategy,for example,on the plans website?4 Are pension plans required to

133、provide information to members on the plans investment performance?Of course,the addition of new questions requires a reassessment of the existing questions.We decided to remove questions relating to the need for auditors and funding of DC arrangements as almost all pension systems required audited

134、financial statements,and DC arrangements,by their definition,are normally fully funded.As a result of these changes,the average integrity sub-index score for the 44 systems in the 2022 Index decreased by 2.30,leading to a decrease in the overall index value of 0.58.However,due to some reforms in the

135、se systems,the average integrity sub-index score fell by only 1.43.04.Changes from 2022 to 2023|Additional systemsThe Index has been expanded in 2023 to include three new retirement income systems Botswana,Croatia and Kazakhstan.This addition continues our longstanding practice of considering a vari

136、ety of systems from different economic,historical and political backgrounds.This approach highlights an important purpose of the Index:to enable comparisons of different systems around the world with a range of design features operating within different contexts and cultures.The Index now includes 4

137、7 retirement income systems covering more than 64%of the worlds population.Updated OECD dataSince the publication of last years Index,the OECD has published an updated version of Pensions at a Glance Asia/Pacific 2022,which updated several data items for the relevant systems.In particular,the net re

138、placement rates were halved for Malaysia and dropped by more than 5%for China and Hong Kong SAR.These changes affect the adequacy sub-index score for these systems.Mercer CFA Institute Global Pension Index 202327Figure 6 below compares the results for 44 systems from 2022 to 2023,which show that the

139、 average value for the overall index has increased slightly.However,this marginal change masks some more significant changes,both up and down,for individual systems.Comments about each system are made in Chapter 5.A comparison from 2022 to 2023SystemTotalAdequacySustainabilityIntegrity20222023202220

140、232022202320222023Argentina 43.3 42.3 55.6 56.3 29.4 29.5 42.9 37.8 Australia 76.8 77.3 70.2 70.7 77.2 78.4 86.8 86.1 Austria 55.0 52.5 69.8 66.8 22.7 22.6 76.5 71.6 Belgium 67.9 68.6 80.8 82.0 39.1 39.4 87.5 88.2 Brazil 55.8 55.7 71.1 70.4 27.8 28.5 70.5 70.1 Canada 70.6 70.2 70.8 71.1 64.7 64.5 78

141、.6 76.7 Chile 68.3 69.9 60.0 60.0 70.3 71.3 78.9 84.0 China 54.5 55.3 64.4 64.2 39.3 39.0 60.0 63.7 Colombia 63.2 61.9 65.2 62.9 55.3 55.4 71.3 69.3 Figure 6.Comparison index values for each system,including the three sub-indices04.Changes from 2022 to 2023|Mercer CFA Institute Global Pension Index

142、202328SystemTotalAdequacySustainabilityIntegrity20222023202220232022202320222023Denmark 82.0 81.3 81.4 82.5 82.5 82.5 82.1 77.8 Finland 77.2 76.6 77.5 77.4 65.3 65.6 93.3 90.9 France 63.2 61.7 84.6 84.5 40.9 40.9 60.1 54.4 Germany 67.9 66.8 80.5 79.8 44.3 45.3 80.9 76.3 Hong Kong SAR 64.7 64.0 61.5

143、51.9 52.1 61.1 87.6 87.6 Iceland 84.7 83.5 85.8 85.5 83.8 83.8 84.4 80.0 India 44.4 45.937.6 41.9 40.7 43.0 60.4 56.5 Indonesia 49.2 51.8 39.3 41.6 44.5 50.6 71.5 69.8 Ireland 70.0 70.2 75.9 77.1 53.5 54.4 83.7 81.1 Israel 79.8 80.8 75.7 77.0 81.9 82.7 83.2 84.4 Italy 55.7 56.3 72.3 72.7 23.1 23.7 7

144、4.7 75.9 Japan 54.5 56.3 58.0 59.2 44.5 46.5 63.0 65.6 Korea(South)51.1 51.2 40.1 39.0 54.9 52.7 63.5 68.5 Malaysia 63.1 56.0 57.2 44.3 60.2 56.1 76.9 74.6 04.Changes from 2022 to 2023|Mercer CFA Institute Global Pension Index 202329SystemTotalAdequacySustainabilityIntegrity2022202320222023202220232

145、0222023Mexico 56.1 55.1 63.1 63.5 57.1 58.4 43.6 37.0 Netherlands 84.6 85.0 84.9 85.6 81.9 82.4 87.8 87.7 New Zealand 68.8 68.3 64.0 65.6 64.7 64.3 82.1 78.3 Norway 75.3 74.4 79.0 79.4 60.4 59.1 90.3 87.8 Peru 55.8 55.5 54.7 55.0 51.5 50.4 63.7 63.5 Philippines 42.0 45.2 40.5 41.8 52.3 63.2 30.0 25.

146、7 Poland 57.5 57.6 59.5 59.8 45.4 45.4 71.2 71.2 Portugal 62.8 67.4 84.9 86.7 29.7 32.0 73.9 85.9 Saudi Arabia 59.2 59.5 61.4 61.5 54.3 54.9 62.5 62.9 Singapore 74.1 76.3 77.3 79.8 65.4 71.6 81.0 77.0 South Africa 54.7 54.0 44.2 44.2 49.7 49.1 78.4 76.6 Spain 61.8 61.6 80.0 79.7 28.7 28.5 78.9 79.2

147、Sweden 74.6 74.0 70.6 72.1 75.7 75.6 79.5 75.0 Switzerland 72.3 72.0 68.7 69.6 70.5 70.6 80.7 77.9 04.Changes from 2022 to 2023|Mercer CFA Institute Global Pension Index 202330SystemTotalAdequacySustainabilityIntegrity20222023202220232022202320222023China Taiwan52.9 53.6 42.0 47.6 53.2 52.9 69.8 64.

148、1 Thailand 41.7 46.4 41.3 45.4 36.4 42.2 50.0 53.9 Turkey45.3 46.3 45.6 46.5 29.8 31.1 66.6 67.3 UAE 61.8 62.5 63.8 72.2 51.9 45.4 72.6 70.8 UK 73.7 73.0 76.5 77.3 63.9 62.7 83.0 80.6 Uruguay 71.5 68.9 84.5 84.0 50.6 46.2 79.8 76.5 US 63.9 63.0 67.5 66.7 61.2 61.1 61.7 59.5 Average63.0 63.1 65.7 66.

149、0 53.0 53.7 72.9 71.6 04.Changes from 2022 to 2023|Mercer CFA Institute Global Pension Index 20233105.The growing impact of artificial intelligence on pension systems and their membersFeature chapterMercer CFA Institute Global Pension Index 202331Mercer CFA Institute Global Pension Index 20233205.Th

150、e growing impact of artificial intelligence on pension systems and their members|Artificial intelligence(AI)has been with us for years and is affecting our lives in many ways,from the use of search engines to institutional investment decisions.Yet,during the next decade,its prevalence is likely to i

151、ncrease significantly so that it will affect every aspect of our pension and social security systems.However,before we get into the details,a couple of definitions may help.Predictive or traditional AI systems are models that are designed to respond to a particular set of inputs.These systems have p

152、rimarily been used to analyze data quickly and make predictions using a set of rules or predefined strategies.That is,this form of AI excels at recognizing existing patterns and,by using algorithms,improves the decision-making process.Generative AI takes us into a very different world,with greater o

153、pportunities as well as additional challenges and risks.This form of AI learns and can create something new that is quite different from previous stories,patterns or outcomes.That is,it connects many pieces of information to draw inferences and thereby innovate and provide new insights and relations

154、hips as well as communicate in human-like text,images,code or voice.AI represents a huge potential to improve our pension and social security systems by analyzing data more quickly,improving accuracy,highlighting future risks,reducing costs,improving outcomes and communication,and helping members in

155、 a more personalized way.This should provide individuals with a much better experience as they interact with our complex retirement systems.AI is already here and evolving quickly.It is a work in progress,but there is no doubt its increasing impact will be profound in the years to come.In this chapt

156、er,we consider the broad impacts of AI on our retirement income systems,including the benefits and some of the risks involved in this development.IntroductionMercer CFA Institute Global Pension Index 202333Capital and financial markets play a critical role in the investment of pension contributions

157、made by employers,employees and the self-employed to ensure that adequate and sustainable retirement benefits can be provided.In fact,the level of investment returns during an individuals working and retirement years is much more important than the level of actual contributions.Hence,its important t

158、hat we understand the existing and future impact of AI on these returns over the longer term.The investment returns received by a pension plan whether DB or DC depend on a number of factors,including the investment beliefs and strategies of the governing body,the costs of managing the investments,ta

159、ctical asset allocations,economic conditions,and the local legislation and taxation.In DC plans,it may also depend on the risk preferences of the members and,in some cases,decisions made by the individual member,particularly during times of financial crisis or uncertainty.So the question is whether

160、AI has the potential to increase investment returns and thereby improve retirement outcomes for plan members.Initially,its important to recognize that AI is already being used in investment markets to make investment decisions based on the analysis of data,reports,risks and market trends.This develo

161、pment dates back to the early 1980s and the introduction of program trading,particularly in areas of high-frequency trading.In these markets,decisions are being made using predefined rules or criteria with no human involvement.A 2019 study showed that around 92%of trading in the Forex market was per

162、formed by trading algorithms rather than humans.16 But algorithmic trading now facilitates automatic trading across all asset classes and market segments.For example,algorithmic trading contributed 60%73%of all US equity trading in 2018 and continues to grow in importance.17 This approach may be par

163、ticularly relevant for short-term market anomalies in which the improved speed of data analysis can highlight opportunities until they are arbitraged away.Such outcomes can lead to more efficient financial markets Pension systems and the investment marketsbut may also increase the risk of crowd beha

164、vior and the associated risks of excessive volatility and greater uncertainty.Second,and perhaps more important for pension plans,AI provides the ability for fund managers to analyze reams of data from a wide variety of sources,including alternative and unexpected sources.This analysis can identify

165、patterns and discover market sentiment or signals and thereby suggest future opportunities for investment that may go beyond the traditional or expected.This can lead to improved asset allocation and/or better diversification,resulting in higher long-term returns and lower volatility.Third,an increa

166、sing number of individual investors wish to consider ethical or ESG factors in their investment decisions.Although this may be a more challenging area due to the complexity and subjectivity of these decisions,AI presents the opportunity to provide improved alignment between investor preferences and

167、investment products.Fourth,AI can enable automation of middle and back offices and thus reduce costs.These lower costs may also narrow the differential between active and passive investment strategies.Such procedures can also introduce real-time monitoring and identification of potential risks,leadi

168、ng to the introduction of appropriate responses to reduce or manage these risks much earlier than would otherwise occur.These include liquidity risks,counterparty risks,concentration risks,operational risks,conduct risk by employees,regulatory reporting and reputational risks.Finally,AI can predict

169、member behavior under a range of possible economic or political circumstances that may have an impact on future cash flows within the pension fund,which,in turn,should influence future investment decisions.For example,a stock market crash can lead to members switching to defensive asset classes,wher

170、eas a newly elected government may lead to some retirees withdrawing their accrued benefits.05.The growing impact of artificial intelligence on pension systems and their members|Mercer CFA Institute Global Pension Index 202334Assuming AI is able to predict such behavior,it should also be able to ini

171、tiate interventions to limit or block inappropriate member behavior.AI is already having an impact on the investments industry.CFA Institute recently surveyed its members and found that AI and big data are helping firms in the following ways:18 Allows staff to use their time more productively by aut

172、omating repetitive activities(45%)Provides additional insights that lead to better products and services(41%)Facilitates better decision-making through enhanced modeling(41%)On balance,the ongoing expansion of AI within the operations and decisions of investment managers should lead to more efficien

173、t and better-informed decision-making processes,producing higher real investment returns for pension plan members and therefore improved retirement outcomes.However,AI will also significantly affect the investment ecosystem,leading to changes in activities,methods,policies and regulations.These deve

174、lopments may be a challenge for some institutions or entities.Of course,notwithstanding these developments,AI is unlikely to be able to predict market prices with accuracy;uncertainty will therefore remain.Figure 7 below summarizes some of the applications of AI in investment management and their po

175、tential benefits to pension plans and other investors.UseExample applicationPotential benefitPortfolio managementFundamental analysisInfer sentiment,discover signals,develop buy/sell recommendations.Mean-variance optimizationDetermine asset allocation with improved parameter estimates.Risk managemen

176、tForecasting market riskIdentify common factors driving market variables and suggest actions to mitigate risks.Backtesting and validationDetect market anomalies.Credit risk estimationImprove measurement of risks.TradingPre-trade analysisIdentify opportunities.Trade executionOptimize executions.Autom

177、ated adviceInvestment recommendationsBuild customized portfolios,allowing for client risk and return preferences.Client onboardingCompliance with Know Your Customer standardsImprove compliance and anti-money-laundering regulations.Figure 7.A summary of the use of AI in investment management19 05.The

178、 growing impact of artificial intelligence on pension systems and their members|Mercer CFA Institute Global Pension Index 202335There are many opportunities for AI to improve the operations of a pension plan,thereby improving efficiency,reducing costs and enhancing the member experience.These includ

179、e:Removing repetitive or routine tasks through automation,which leads to greater accuracy,fewer complaints and improved efficiency Improving the assessment and understanding of future risks through significantly increasing data analysis associated with the growth of regulation and compliance require

180、ments;for instance,greater analysis relating to financial fraud,cyberattacks,partnerships with third parties and vendors,employee behavior,and political announcements Improving identity-fraud detection,which is a growing issue,especially as the importance of DC pension arrangements continues to incr

181、ease around the world Modeling member behavior relating to contributions,tax changes,withdrawals,retirement rates and changing economic conditions Modeling future business opportunities and challenges,with the related demand for financial and human resources due to the inevitable impact of demograph

182、ic,economic,labor force and policy changesThe pension plans operationsIn short,pension plans can potentially obtain a much improved understanding of their operations,risks and opportunities through AI,over both the short and longer terms,and so deliver better outcomes for their active and retired me

183、mbers.However,these developments will only be beneficial if the pension systems have accurate and complete data to train and deploy AI models.It is also important that AI be introduced in a manner that is consistent with the cost structure,values,culture and mission of the pension organization.Other

184、wise,there is the real risk of increased uncertainties leading to unhelpful disruption from employees and reduced confidence from plan members.Generative AI may be able to develop new pension products that go beyond current thinking or constraints.For example,a new low-cost hybrid product for retire

185、es encompassing real investment returns,risk aversion and longevity protection may provide a better outcome than traditional retirement products.05.The growing impact of artificial intelligence on pension systems and their members|Mercer CFA Institute Global Pension Index 202336AI,in all its forms,c

186、an lead to significant improvement in the level of engagement and understanding by pension plan members and those within social security arrangements.This development is needed as many pension arrangements are poorly understood or appreciated by individuals.However,this is not solely the fault of me

187、mbers.It must also be accepted that the communication provided by social security and pension plans can be opaque,verbose or expressed in legal language.Sometimes this unfortunate outcome is driven by legislation and compliance requirements.Now is the time to improve the standard of this communicati

188、on through the help of AI.For example,the use of similar terminology by all components within an overall pension system,expressed in language appropriate to the individual,may lead to a significant improvement in understanding for workers and retirees.In addition,with the growth of DC pension arrang

189、ements around the world,individuals now have more responsibility and are taking greater control,and there is a growing demand for real-time information.The pension industry must now communicate better than in the days of DB pensions when employers bore the risks.Fortunately,AI can be used in various

190、 ways to improve member communications and enhance understanding of future benefits and available options.Member engagementA current example used by many leading pension plans is the development of chatbots interfaces that aim to mimic human conversations through text or voice interaction.Although t

191、he initial version of these communication tools may be limited,they continue to improve as they integrate previous questions,commentary and answers.An obvious extension from current arrangements is to use all accessible data and data analytics to modify the communication received by each member.For

192、example,the communication can be personalized(at least to some extent)in the members preferred format and take into account the individuals pension benefits from all sources as well as their previous financial decisions about contributions or investment strategy.However,we can go much further with A

193、I.For example,the pension plan could understand more about individual members by applying natural language processing to analyze the language individuals use in their emails,texts and phone calls.That is,the language used by the pension plan can be adapted so it is relevant to individuals and their

194、education,financial position,opinions and attitudes.Improved understanding of its members should deliver greater efficacy for the pension plan and better results for individuals and households.05.The growing impact of artificial intelligence on pension systems and their members|Mercer CFA Institute

195、Global Pension Index 202337With the ongoing growth of DC plans and individual savings accounts around the world,many individuals are required to make long-term financial decisions at retirement.These decisions are not straightforward as every individual has different characteristics relating to:The

196、presence of a partner Their health and that of their partner(if relevant)Aspirations for their retirement lifestyle,both immediately and in the decades ahead Other sources of income The level of government support available,including social security and health costs Taxation issues Home ownership Th

197、eir attitude toward a range of risks,including market risk,inflation risk and longevity risk Estate planningPension plans should be well placed to assist.However,in many cases,they have limited information regarding the households financial position or understanding of the retirees goals for the nex

198、t two or three decades.In some jurisdictions,an open banking regime may permit a pension plan to obtain additional financial information relevant to the individual.However,this is unlikely to be sufficient to provide an adequate overview.Additional financial and personal data will be required before

199、 an appropriate recommendation can be made.Hence,there is a need for the development of AI tools to provide members with meaningful options and recommendations for these complex decisions.This is likely to be an area where AI could be used to provide a more affordable and realistic outcome than expe

200、cting every retiree to see a personal financial advisor.On the other hand,this potentially efficient production of personalized recommendations to retirees may run counter to existing regulations or compliance requirements relating to the provision of personal financial advice.Of course,recommendati

201、ons must be relevant and sensible,but do they require the presence of a human advisor,or should a machine be acceptable?There is no doubt that financial decisions approaching and during retirement are difficult,and there is no single answer.Yet we must find a way for individuals to be able to unders

202、tand the options available to them after considering all the relevant information relating to their personal circumstances.AI has the potential to have a significant role in improving the decision-making processes of individuals and households by tailoring the guidance and recommendations to provide

203、 better long-term outcomes for millions of retirees.Retirement planning05.The growing impact of artificial intelligence on pension systems and their members|Mercer CFA Institute Global Pension Index 202338The above comments suggest that there are significant opportunities for pension plans to use AI

204、 to increase investment returns,improve member engagement and produce better outcomes for members.Yet such developments are not cheap,and there are significant challenges and risks along the way.One challenge present in developing all AI tools is whether the right questions are being asked and there

205、fore answered by the AI tool.After all,different questions will lead to different answers.Hence,prompt engineers are now in strong demand to ensure the right questions are being asked.Although the financial questions may be relatively straightforward,questions relating to a retirees aspirations or r

206、isk tolerance are much more difficult.A second challenge relates to the development of the model itself.One danger is that a model or algorithm that worked well in a previous setting may be extended to a new situation or a broader context for which the original framework may no longer be appropriate

207、.The model may also generate fake or misleading information.These examples highlight the need to test and validate all models,which will normally involve some human beings who have an excellent understanding of the context and the range of circumstances or answers that may apply.It should also be no

208、ted that although the current generative AI models produce excellent results in terms of language outputs,their understanding and application of mathematics is much more limited,at least at the moment.Of course,we would expect this shortcoming to be reduced in the future.A third challenge relates to

209、 data privacy and the need to protect and safeguard members data and inputs.This suggests that pension plan models and algorithms must be private and not available to the global AI world.Such challenges highlight the need for strong defenses against cyberattacks,scammers and other security breaches.

210、Members must have absolute confidence in the system if AI is to be appropriately leveraged for its full benefit.A fourth challenge relates to the fact that AI can faithfully reproduce a persons voice,writing style,photo or video.This,combined with the growth of sophisticated cyber-breaching security

211、 programs,will probably lead to an increased incidence of identity fraud,which may threaten public confidence in long-term pension systems.A fifth challenge is that AI algorithms may have biases,offer unjustified responses(known as hallucinations)and not know right from wrong.It is important that th

212、e models be fully tested to ensure that inappropriate outcomes do not occur and that the recommendations are sensitive to the context of the individual.A classic example of wrong outcomes is Robodebt in Australia,where unlawful and incorrect automated debt collection letters were sent to 470,000 soc

213、ial security recipients,resulting in some suicides and considerable mental illness among many recipients.In addressing these challenges,strong governance and clear accountability arrangements will be essential in the development of all AI models.They are not in a world of their own!Such models must

214、be reviewed and tested regularly as conditions change to ensure that their outcomes are sensible and consistent with existing legislation and compliance requirements as well as changing legislation or economic conditions.Challenges and risks05.The growing impact of artificial intelligence on pension

215、 systems and their members|Mercer CFA Institute Global Pension Index 202339The growing use of machines to make predictions,prepare communications and recommend solutions or behavior to individuals based on available data without any direct input from the relevant individual raises important ethical

216、and moral questions.For example,could specific options or solutions be removed for some individuals based on certain characteristics,such as age,address,race,language,religion,gender,sexual orientation or ideology?Such outcomes are likely to run counter to existing discrimination or human rights leg

217、islation in some jurisdictions.A lack of transparency relating to a models working is also likely to lead to confusion and lack of trust.It may also lead to adverse media stories.Yet pension plans rely on long-term trust from their members as the plans invest funds for decades.An inappropriate use o

218、f AI can quickly lead to a destruction of trust,which may be very hard to recover.It is therefore critical that predictions or recommendations be easily explainable and justifiable to plan members,even when the personal data is incomplete.This will require careful planning and explanation by pension

219、 plans that choose to adopt these models.Active governance and clear accountability are essential in the development of all AI models and algorithms.This will require experienced pension professionals to be involved,for,without that experience,judgment and oversight,there is the real risk that some

220、outcomes will be unhelpful or misleading,and possibly even wrong,in the complex world of pensions and social security.Ethical concerns05.The growing impact of artificial intelligence on pension systems and their members|As CFA Institute notes:“This underscores the importance of the AI+HI paradigm;hu

221、man intelligence(HI)provides supplemental cognitive capabilities that,when combined with AI,provide for a more effective and robust overall solution.”20Mercer CFA Institute Global Pension Index 202340Artificial intelligence in all its forms provides a great opportunity to significantly improve the e

222、xperience and outcomes for individuals and households.As highlighted above,AI can be used in many aspects of pension arrangements to potentially improve returns,reduce costs and develop new products,thereby delivering a higher standard of living in retirement a worthwhile objective for all pension s

223、ystems.However,it will not happen quickly,and there are significant challenges to overcome.Nevertheless,with appropriate policies,legislation,governance and development,future retirees can look forward to greater engagement,better understanding and improved outcomes for many years,at potentially low

224、er costs and with improved accessibility.Finally,and from a nonfinancial perspective,most retirees face reduced cognitive and communication abilities later in life.AI can potentially help maintain some of these abilities and thereby improve the quality of life in these years.Conclusion05.The growing

225、 impact of artificial intelligence on pension systems and their members|Mercer CFA Institute Global Pension Index 202341This chapter provides a summary of each retirement system and potential areas for improvement.Whether such developments are appropriate in the short term depends on the current soc

226、ial,political and economic situation.We have provided some comments on changes from 2022 to 2023 where relevant.Some of these were due to the review of the integrity sub-index as detailed in Chapter 3 and updated data from the OECD for the Asia-Pacific region.06.A brief review of each systemMercer C

227、FA Institute Global Pension Index 202342AB+BC+CDEFigure 8.Global grades06.A brief review of each system|Mercer CFA Institute Global Pension Index 202343Argentinas retirement income system is composed of a pay-as-you-go social security system(comprising a basic pension and an earnings-related benefit

228、)together with voluntary occupational corporate and individual pension plans that may be offered through employer book reserves,insurance companies or pension trusts.The overall index value for the Argentinian system could be increased by:Expanding coverage of employees in occupational pension schem

229、es through automatic membership or enrollment,thereby increasing the level of contributions and assets Introducing a minimum level of mandatory contributions into a retirement savings fund Introducing a minimum age to access benefits from private pension plans Improving the regulatory requirements f

230、or the private pension systemThe Argentinian index value decreased from 43.3 in 2022 to 42.3 in 2023,primarily due to the changes in the integrity sub-index outlined in Chapter 3.Australias retirement income system comprises a means-tested age pension(paid from general government revenue);a mandator

231、y employer contribution paid into private-sector arrangements and additional voluntary contributions from employers,employees or the self-employed paid into private-sector plans.The overall index value for the Australian system could be increased by:Moderating the assets test on the means-tested age

232、 pension to increase the net replacement rate for average income earners Introducing a requirement that part of the retirement benefit be taken as an income stream in most circumstances Introducing a government superannuation contribution to primary carers of young children Introducing a requirement

233、 to show benefit projections on members annual statementsThe Australian index value increased from 76.8 in 2022 to 77.3 in 2023,primarily due to higher mandatory contributions and increased pension assets.ArgentinaAustraliaOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index205

234、677.3Rank out of 47570.778.486.1OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index56.334434529.537.842.3Rank out of 474706.A brief review of each system|Mercer CFA Institute Global Pension Index 202344Austrias retirement income system consists of a DB public pension scheme wi

235、th an income-tested top-up for low-income pensioners and voluntary private pension plans.The overall index value for the Austrian system could be increased by:Increasing the minimum level of support for the poorest aged individuals Introducing a minimum access age so that the benefits from private p

236、ension plans are preserved for retirement purposes Expanding coverage of employees in occupational pension schemes,thereby increasing the level of contributions and assets(which could be done by collective bargaining agreements or tax-effective regulation)Introducing arrangements to protect the pens

237、ion interests of both parties in a divorce Increasing the labor force participation rate at older agesThe Austrian index value decreased from 55.0 in 2022 to 52.5 in 2023,primarily due to a corrected answer from 2022 and the changes in the integrity sub-index outlined in Chapter 3.Belgiums retiremen

238、t income system comprises public,occupational and private pension schemes.The public pension scheme is earnings-related with a means-tested safety net.Voluntary private pension arrangements are typically operated by insurance companies.The overall index value for the Belgian system could be increase

239、d by:Introducing a requirement that part of the retirement benefit be taken as an income stream Introducing a minimum level of mandatory contributions into a retirement savings fund,thereby increasing the level of pension assets over time Introducing greater flexibility relating to pension design as

240、 individuals transition into retirement Increasing the labor force participation rate at older ages as life expectancies riseThe Belgian index value increased from 67.9 in 2022 to 68.6 in 2023 due to small improvements in each sub-index.AustriaBelgiumOverallindexRankAdequacysub-indexSustainabilitysu

241、b-indexIntegritysub-index23472752.5Rank out of 474066.822.671.6OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index739268.6Rank out of 471682.039.488.206.A brief review of each system|Mercer CFA Institute Global Pension Index 202345Brazils retirement income system comprises a p

242、ay-as-you-go social security system and voluntary occupational corporate and individual pension plans.These plans may be offered through insurance companies or pension trusts.The overall index value for the Brazilian system could be increased by:Increasing coverage of employees in occupational pensi

243、on schemes through automatic membership or enrollment,thereby increasing the level of contributions and assets Introducing a minimum level of mandatory contributions into a retirement savings fund Introducing a minimum access age so that the benefits are preserved for retirement purposes,including t

244、he pension plans operated by insurance companies Enabling individuals to retire gradually while receiving a part pensionThe Brazilian index value decreased slightly from 55.8 in 2022 to 55.7 in 2023 due to several minor changes.BrazilOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritys

245、ub-index21453155.7Rank out of 473370.428.570.1Botswanas retirement income system consists of private and public pension systems.The Public Old Age Pension(POAP)is fully funded by the government and provides a benefit to all citizens above age 65 living in Botswana.The benefit is adjusted periodicall

246、y based on cost of living and is non-means tested.Private pensions consist of a mandatory pension scheme for public-sector employees and a voluntary pension system for private-sector employees.Private pensions include both DB and DC arrangements.The overall index value for the Botswanan system could

247、 be increased by:Increasing the minimum level of support for the poorest aged individuals Expanding coverage of employees in occupational pension schemes,thereby increasing the level of contributions and assets Increasing the level of home ownershipThe Botswanan index value for 2023 is 54.5.Botswana

248、OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index46261154.5Rank out of 473739.852.880.606.A brief review of each system|Mercer CFA Institute Global Pension Index 202346Chiles retirement income system comprises means-tested social assistance,a mandatory privately-managed DC s

249、ystem based on employee contributions with individual accounts managed by a small number of Administradoras de Fondos de Pensiones(AFPs)and a framework for voluntary contributions.The overall index value for the Chilean system could be increased by:Increasing the minimum level of support for the poo

250、rest aged individuals Increasing the pension age for women Introducing a government pension contribution for those caring for young children Increasing coverage of employer-sponsored plans,thereby increasing the level of assets over timeThe Chilean index value increased from 68.3 in 2022 to 69.9 in

251、2023,primarily due to improved regulations.ChileOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index309969.9Rank out of 471460.071.384.0Canadas retirement income system comprises a universal flat-rate pension supported by a means-tested income supplement,base and enhanced earni

252、ngs-related pensions based on revalued lifetime earnings provided through a national program,voluntary occupational pension schemes(many of which are DB schemes),and voluntary individual retirement savings plans.The overall index value for the Canadian system could be increased by:Increasing the cov

253、erage of employees in occupational pension schemes through the development of an attractive product for those without an employer-sponsored scheme Introducing a minimum access age for all pension products Increasing the level of household savings and reducing the level of household debt Reducing gov

254、ernment debt as a percentage of GDPThe Canadian index value decreased slightly from 70.6 in 2022 to 70.2 in 2023,primarily due to the changes in the integrity sub-index outlined in Chapter 3.CanadaOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index19122070.2Rank out of 471271.

255、164.576.706.A brief review of each system|Mercer CFA Institute Global Pension Index 202347Chinas retirement income system comprises a mandatory pillar-one state pension,a voluntary employer-sponsored pillar two(enterprise annuity for corporates and occupational annuity for the public sector)and a vo

256、luntary pillar-three private pension arrangement unveiled in 2022.The state pension comprises an urban employee basic pension and an urban/rural residents(non-employed)basic pension system.State pension has a pay-as-you-go social pooling account(combination of contribution and fiscal expenditure)and

257、 funded individual accounts(from employee contributions).The overall index value for the Chinese system could be increased by:Increasing the minimum level of support for the poorest aged individuals Continuing to increase the coverage of the pension systems Introducing a requirement that part of the

258、 supplementary retirement benefit be taken as an income stream Increasing the state pension age over time Offering more investment options to members and thereby permitting a greater exposure to growth assetsThe Chinese index value increased from 54.5 in 2022 to 55.3 in 2023,primarily due to updated

259、 data relating to the integrity sub-index score.Colombias retirement income system comprises a means-tested pension paid to the needy and two parallel and mutually exclusive pension systems.The first is a pay-as-you-go DB plan managed by a public-sector entity,and the second is a system of funded in

260、dividual accounts offered through qualified financial institutions in the private sector.Individuals can make additional voluntary contributions to increase retirement benefits and/or reduce taxes.An employee elects to join one system,although there is the option to change later,with certain restric

261、tions.The employer and employee contribution rates are the same for both systems,but retirement benefits differ between systems(DB versus individual accounts).The overall index for the Colombian system could be increased by:Increasing the minimum level of support for the poorest aged individuals Rai

262、sing the level of household savings Increasing coverage of employees in the pension schemes,thereby gradually increasing the level of pension assets Raising the state pension age over time,particularly for women Introducing arrangements to protect the pension interests of both parties in a divorceTh

263、e Colombian index value decreased from 63.2 in 2022 to 61.9 in 2023,primarily due to a corrected answer from 2022.ChinaColombiaOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index26403855.3Rank out of 473564.239.063.7OverallindexRankAdequacysub-indexSustainabilitysub-indexInteg

264、ritysub-index28223361.9Rank out of 472462.955.469.306.A brief review of each system|Mercer CFA Institute Global Pension Index 202348Croatias retirement income system has seen major reform since 2002,resulting in a three-pillar retirement system.The first pillar comprises mandatory contributions of 1

265、5%of salary,resulting in a DB pension paid on retirement.The second pillar is DC,where employees contribute 5%of salary into an individual pot from which members draw a retirement pension.There is also a voluntary pension fund that members can choose to contribute to.The overall index for the Croati

266、an system could be increased by:Increasing the minimum level of support for the poorest aged individuals Increasing the level of funded contributions in private pension plans,thereby increasing the level of assets over time Increasing the labor force participation rate,particularly at older ages as

267、life expectancies riseThe Croatian index value for 2023 is 60.3.Denmarks retirement income system comprises a public basic pension scheme,a means-tested supplementary pension benefit,a fully funded DC scheme providing lifelong pensions and mandatory occupational DC schemes.The overall index value fo

268、r the Danish system could be increased by:Raising the level of household savings and reducing the level of household debt Introducing arrangements to protect the interests of both parties in a divorce Requiring all pension plans to produce an annual report available to all membersThe Danish index va

269、lue decreased from 82.0 in 2022 to 81.3 in 2023,primarily due to the changes in the integrity sub-index outlined in Chapter 3.CroatiaDenmarkOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index33212860.3Rank out of 472757.156.071.4OverallindexRankAdequacysub-indexSustainabilitys

270、ub-indexIntegritysub-index631881.3Rank out of 47382.582.577.806.A brief review of each system|Mercer CFA Institute Global Pension Index 202349Finlands retirement income system consists of a basic state pension,which is income tested,and a range of statutory earnings-related schemes.The overall index

271、 value for the Finnish system could be increased by:Increasing the minimum level of support for the poorest aged individuals Raising the level of household savings and reducing the level of household debt Continuing to raise the level of mandatory contributions set aside for future retirement benefi

272、ts Introducing arrangements to protect the pension interests of both parties in a divorceThe Finnish index value decreased from 77.2 in 2022 to 76.6 in 2023,primarily due to the changes in the integrity sub-index outlined in Chapter 3.Frances retirement income system comprises an earnings-related pu

273、blic pension with a minimum pension and a supplementary retirement pension scheme for private-sector workers(known as AGIRC-ARRCO).France also has voluntary occupational plans.The overall index value for the French system could be increased by:Increasing the level of funded contributions,thereby inc

274、reasing the level of assets over time Increasing the labor force participation rate at older ages as life expectancies rise Improving the regulatory requirements for the private pension system The French index value decreased from 63.2 in 2022 to 61.7 in 2023,primarily due to the changes in the inte

275、grity sub-index outlined in Chapter 3.FinlandFranceOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index1211176.6Rank out of 47677.465.690.9OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index4384361.7Rank out of 472584.540.954.406.A brief review of each sy

276、stem|Mercer CFA Institute Global Pension Index 202350Germanys retirement income system comprises an earnings-related pay-as-you-go system based on the number of pension points earned during an individuals career,a means-tested safety net for lowincome pensioners and supplementary pension plans that

277、are common among major employers.These plans typically adopt either a bookreserving approach,with or without segregated assets,or an insuredpensions approach.The overall index value for the German system could be increased by:Increasing the minimum pension for low-income pensioners Increasing the le

278、vel of funded contributions in private pension plans,thereby increasing the level of assets over time Increasing coverage of employees in occupational pension plansThe German index value decreased from 67.9 in 2022 to 66.8 in 2023,primarily due to the changes in the integrity sub-index outlined in C

279、hapter 3.Hong Kongs retirement income system consists of Mandatory Provident Funds(MPFs)in which employers,most employees and the self-employed are each required to make mandatory contributions of 5%of relevant income to the MPF scheme,subject to minimum and maximum relevant income levels.Scheme mem

280、bers who have reached age 65,or who have reached age 60 and have decided to retire early,can choose either to withdraw their MPF benefits as a lump sum or by installments,or to retain all their MPF benefits in their accounts for continuous investment.The overall index value for the Hong Kong SAR sys

281、tem could be increased by:Introducing a requirement that part of the retirement benefit be taken as an income stream Increasing the minimum pension for low-income pensioners Increasing the level of household savings and reducing the level of household debt Increasing the labor force participation ra

282、te at older ages as life expectancies rise Introducing requirements to protect all the pension interests of both parties in a divorceThe index value for Hong Kong SAR decreased from 64.7 in 2022 to 64.0 in 2023,primarily due to the updated OECD data.GermanyHong Kong SAR,ChinaOverallindexRankAdequacy

283、sub-indexSustainabilitysub-indexIntegritysub-index9352366.8Rank out of 471979.845.376.3OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index3617564.0Rank out of 472151.961.187.606.A brief review of each system|Mercer CFA Institute Global Pension Index 202351Icelands retirement i

284、ncome system comprises a basic state pension and a pension supplement(both of which are income tested according to different rules),mandatory occupational private pension schemes with contributions from both employers and employees,and voluntary personal pensions.The overall index value for the Icel

285、andic system could be increased by:Reducing the level of household debt as a percentage of GDP Introducing arrangements to protect all the pension interests of both parties in a divorce Reducing government debt as a percentage of GDPThe index value for Iceland decreased from 84.7 in 2022 to 83.5 in

286、2023,primarily due to the changes in the integrity sub-index outlined in Chapter 3.Indias retirement income system comprises an earnings-related employee pension scheme,a DC employee provident fund(EPFO)and supplementary employer-managed pension schemes that are largely DC in nature.Government schem

287、es have been launched as part of the universal social security program aimed at benefiting the unorganized sector.The overall index value for the Indian system could be increased by:Introducing a minimum level of support for the poorest aged individuals Increasing coverage of pension arrangements fo

288、r the unorganized working class Introducing a minimum access age so that benefits are preserved for retirement purposes Improving the regulatory requirements for the private pension systemThe Indian index value increased from 44.4 in 2022 to 45.9 in 2023,primarily due to an improvement in the adequa

289、cy sub-index.IcelandIndiaOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index311383.5Rank out of 47285.583.880.0OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index43364245.9Rank out of 474541.943.056.506.A brief review of each system|Mercer CFA Institute

290、Global Pension Index 202352Indonesias retirement income system comprises earnings-related civil-service pensions and DB/DC plans for private-sector workers.The Government Social Security Program is a mandatory DC-based scheme funded through regular employer and employee contributions.The national st

291、atutory pension provides a DB-based payout with two components:severance pay and longservice pay.The overall index value for the Indonesian system could be increased by:Introducing a minimum level of support for the poorest aged individuals Expanding coverage of employees in occupational pension sch

292、emes,thereby increasing the level of assets over time Continuing to improve the regulatory requirements for the private pension system Introducing a requirement to show benefit projections on members annual statementsThe Indonesian index value increased from 49.2 in 2022 to 51.8 in 2023,primarily du

293、e to improved regulations relating to retirement incomes.Irelands 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 pro

294、vide supplementary income in retirement.Currently,the occupational pensions market in Ireland is experiencing a period of rationalization and consolidation due to the introduction of the IORP II regime.As a result,several plans are consolidating into master trusts,which will increase the governance,

295、operational standards and regulatory supervision of these plans over time.The overall index value for the Irish system could be increased by:Implementing government plans to introduce an automatic enrollment retirement savings regime,thereby increasing pensions coverage for many employees and increa

296、sing the level of contributions and assets,whether through employer-sponsored occupational pension schemes or the state-operated auto-enrollment Increasing the labor force participation rate at older ages as life expectancies rise Providing greater protection of members accrued benefits The Irish in

297、dex value increased slightly from 70.0 in 2022 to 70.2 in 2023 due to several minor improvements.IndonesiaIrelandOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index45283251.8Rank out of 474141.650.669.8OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index1

298、4241070.2Rank out of 471377.154.481.106.A brief review of each system|Mercer CFA Institute Global Pension Index 202353Israels retirement income system comprises a universal state pension with an income-tested supplement and private pensions with compulsory employer and employee contributions.Since 2

299、008,there has been a requirement to take a minimum annuity.The overall index value for the Israeli system could be increased by:Reducing government debt as a percentage of GDP Improving protection for members of private pension plans in the event of mismanagement or fraud Introducing a carers pensio

300、n credit for those caring for young childrenThe Israeli index value increased from 79.8 in 2022 to 80.8 in 2023 due to small improvements in each sub-index.Italys retirement income system comprises a notional DC scheme for workers and a minimum means-tested social assistance benefit.Voluntary supple

301、mentary occupational schemes also exist.The overall index value for the Italian system could be increased by:Expanding coverage of employees in occupational pension schemes,thereby increasing the level of contributions and assets Continuing to raise the labor force participation rate at older ages a

302、s life expectancies rise Restricting the availability of benefits before retirement(other than bridge pensions)Reducing government debt and government spending on pensions as a percentage of GDPThe Italian index value increased from 55.7 in 2022 to 56.3 in 2023 due to small improvements in each sub-

303、index.IsraelItalyOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index152880.8Rank out of 47477.082.784.4OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index16462456.3Rank out of 473172.723.775.906.A brief review of each system|Mercer CFA Institute Global P

304、ension Index 202354Japans retirement income system comprises a flat-rate basic pension,an earnings-related public pension and voluntary private pension plans.The overall index value for the Japanese system could be increased by:Continuing to increase the level of private pension coverage and thereby

305、 increase the level of contributions and pension plan assets Introducing an encouragement that part of the retirement benefit be taken as an income stream,such as an annuity payment Announcing a further increase in the future state pension age as life expectancy continues to increase Reducing the le

306、vel of government debt as a percentage of GDP The Japanese index value increased from 54.5 in 2022 to 56.3 in 2023 due to improvements in each sub-index.Kazakhstans retirement income system comprises a basic pension and an earnings-related benefit(for retirees with service records before 1998),both

307、paid from general government revenue.In 1998,a fully funded mandatory DC component was launched,currently with a compulsory employee contribution of 10%paid into individual accounts(with an additional 5%compulsory contribution sponsored by employers in favor of employees working in hazardous conditi

308、ons).There are also additional voluntary DC plans.The overall index value for the Kazakhstani system could be increased by:Increasing the minimum level of support for the poorest aged individuals Raising the level of household savings Reducing preretirement leakage by limiting the access to private

309、pension funds before retirement Increasing the labor force participation rate at older ages as life expectancies rise Introducing a requirement to show benefit projections on members annual statementsThe Kazakhstani index value for 2023 is 64.9.JapanKazakhstanOverallindexRankAdequacysub-indexSustain

310、abilitysub-indexIntegritysub-index32313656.3Rank out of 473059.246.565.6OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index3871464.9Rank out of 472046.974.880.006.A brief review of each system|Mercer CFA Institute Global Pension Index 202355Koreas retirement income system comp

311、rises a public earnings-related pension scheme with a progressive formula,based on both individual earnings and the average earnings of the insured as a whole,and statutory private pension plans.The overall index value for the Korean system could be increased by:Improving the level of support provid

312、ed to the poorest pensioners Introducing a requirement that part of the retirement benefit from private pension arrangements be taken as an income stream Increasing the level of funded contributions,thereby increasing the level of assets over time Improving the governance and communication requireme

313、nts for the private pension system The Korean index value increased slightly from 51.1 in 2022 to 51.2 in 2023 due to several minor changes offsetting each other.Malaysias retirement income system is based on the Employee Provident Fund(EPF),which covers all private-sector employees and non-pensiona

314、ble public-sector employees.Under the EPF,some benefits are available to be withdrawn at any time(under predefined circumstances,including education,home loans and severe ill health),with other benefits preserved for retirement.The overall index value for the Malaysian system could be increased by:I

315、ncreasing the minimum level of support for the poorest aged individuals Raising the level of household savings and lowering the level of household debt Introducing a requirement that part of the retirement benefit be taken as an income stream Increasing the pension age and the labor force participat

316、ion rate at older ages as life expectancy continues to riseThe Malaysian index value decreased from 63.1 in 2022 to 56.0 in 2023,primarily due to the significant reduction in the net replacement rates published by the OECD from the rates previously used.Korea(South)MalaysiaOverallindexRankAdequacysu

317、b-indexSustainabilitysub-indexIntegritysub-index47273451.2Rank out of 474239.068.552.7OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index41202656.0Rank out of 473244.356.174.606.A brief review of each system|Mercer CFA Institute Global Pension Index 202356Mexicos retirement in

318、come system comprises a social security retirement system with a means-tested age pension,a mandatory funded DC system that includes a minimum pension and voluntary occupational pension schemes.There is also a universal pension for all Mexicans from age 68.The overall index value for the Mexican sys

319、tem could be increased by:Increasing the level of the pension paid to the poorest aged individuals Increasing the pension coverage for those in the informal labor market Introducing a requirement that part of the retirement benefit from private pension arrangements be taken as an income stream Incre

320、asing the level of funded contributions,thereby increasing the level of assets over time Improving the governance requirements for the private pension system,including the need for minimum levels of funding in DB plans Improving the level of communication required to members from pension plansThe Me

321、xican index value decreased from 56.1 in 2022 to 55.1 in 2023,primarily due to the changes in the integrity sub-index outlined in Chapter 3.The Netherlands retirement income system comprises a flat-rate public pension and quasi-mandatory earnings-related occupational pension schemes linked to indust

322、rial agreements.The overall index value for the Dutch system could be increased by:Reducing the level of household debt Increasing the labor force participation rate at older ages as life expectancies rise Introducing a carers pension credit for those caring for young childrenThe Dutch index value i

323、ncreased slightly from 84.6 in 2022 to 85.0 in 2023,primarily due to a strengthening of the early retirement regulations.MexicoThe NetherlandsOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index27194655.1Rank out of 473663.558.437.0OverallindexRankAdequacysub-indexSustainabilit

324、ysub-indexIntegritysub-index24485.0Rank out of 47185.682.487.706.A brief review of each system|Mercer CFA Institute Global Pension Index 202357New Zealands retirement income system comprises a universal public pension,the KiwiSaver DC retirement scheme or alternative occupational schemes.KiwiSaver i

325、s a voluntary scheme with contributions from the government,employers and members.New employees who are not already members of KiwiSaver are automatically enrolled by their employers and can remain in KiwiSaver unless they elect to opt out within a limited time of joining.The overall index value for

326、 the New Zealand system could be increased by:Increasing the level,coverage and tax efficiency of KiwiSaver contributions,thereby increasing the level of assets set aside for future retirement benefits Raising the level of household savings and reducing the level of household debt Introducing a care

327、rs savings credit or contribution for those caring for young children that is not contingent on the carer making a contribution Introducing a requirement for KiwiSaver schemes to provide options for regular payments during retirementThe New Zealand index value decreased slightly from 68.8 in 2022 to

328、 68.3 in 2023,primarily due to the changes in the integrity sub-index outlined in Chapter 3.Norways retirement income system comprises an earnings-related social security pension with a minimum pension level and mandatory occupational pension plans.Many voluntary arrangements also provide additional

329、 benefits.The overall index value for the Norwegian system could be increased by:Raising the level of household savings and reducing the level of household debt Increasing the level of mandatory contributions to DC plans,thereby raising the level of pension assets Introducing the option for voluntar

330、y contributions with tax relief for members of DC plans Introducing arrangements to protect all the pension interests of both parties in a divorceThe Norwegian index value decreased from 75.3 in 2022 to 74.4 in 2023,primarily due to the changes in the integrity sub-index outlined in Chapter 3.New Ze

331、alandNorwayOverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index25131668.3Rank out of 471765.664.378.3OverallindexRankAdequacysub-indexSustainabilitysub-indexIntegritysub-index1118374.4Rank out of 47879.459.187.806.A brief review of each system|Mercer CFA Institute Global Pensio

332、n Index 202358Perus retirement income system comprises a means-tested pension paid to the needy and two parallel and mutually exclusive pension systems.At the time of enrollment,people choose between a pay-as-you-go DB public system and a fully funded DC system managed by the private sector.Individu

333、als under the DB scheme can change;otherwise,it is an irreversible decision.Employers dont contribute to the system all contributions are made by the employee.The overall index value for the Peruvian system could be increased by:Reducing access to pension assets before retirement Increasing the minimum level of support for the poorest aged individuals Expanding coverage of employees in occupationa