21st July 2017

Natixis: The world is getting older − policy needs to be wiser | Czech Government document on pension reform says Czech pension system is sustainable

In this year’s Global Retirement Index by Natixis, the countries with the largest positive change in rankings are Denmark, Luxembourg, Ireland, the Czech Republic and Malta. Denmark rises to 8th place from 12th last year due to the Quality of Life and Material Wellbeing subindices, while Ireland and the Czech Republic both gain two spots because of higher scores in the Material Wellbeing, Finance and Quality of Life sub-indices. Luxembourg moves up three spots to 10th because Austria, Canada and Finland – all countries that ranked higher than Luxembourg last year – decline in overall score. Malta moves up two spots to 21st because of gains in the Health, Quality of Life and Material Wellbeing sub-indices. The biggest declines among the top 25 are Austria and the United States. Austria slips four spots to 13th mainly due to a significant drop in Finances owing to the interest rate indicator as well as declines in the Quality of Life and Health subindices.

And the United States falls three spots to 17th because of declines in the income equality, happiness and life expectancy indicators. Ireland, Belgium and Czech Republic – all countries ranking behind the United States last year – increase their score and move ahead of the United States in overall ranking, the analysis says.

The Czech Republic improves its ranking from 18th to 16th this year. The country achieves a balanced set of results across all sub-indices and registers its strongest performance in Material Wellbeing (6th). The country performs well in the Finance (18th) sub-index, improving in multiple indicators compared to last year. Its public finances are healthier due to less public debt and a lower tax burden. And its banking sector has a lower proportion of non-performing loans. While none of its indicators lies in the bottom 10, only one – the interest rates indicator (10th) – breaks into the top 10.

The Material Wellbeing (6th) and Quality of Life (23rd) sub-indices have also improved compared to last year. Unemployment falls and income per capita rises within Material Wellbeing. And in the Quality of Life sub-index, lower CO2 emissions per GDP and higher usage of renewable electricity drive improvement in the environmental factors indicator. The happiness indicator also increases compared to last year. Health (27th) is the only sub-index in which the Czech Republic fares worse than last year. The country sees a fall in its life expectancy score and none of its indicators breaks into the top 10.

It seems Western European countries have mastered the balance between higher individual prosperity and maintaining
relative levels of income equality. All Western European countries have both their income equality scores and income per
capita scores above 50%. Non-Western European countries such as the Czech Republic and Canada are just as likely to
score greater than 50% in both indicators, but all countries lacking in one or both indicators are non-Western European.
Retirees in the rich but more unequal countries such as the United States, Singapore and Israel run the risk of having
retirement systems set up to disproportionally benefit certain citizens who have higher levels of incomes. The countries
that have less than 50% in both income equality and income per capita are mainly BRIC countries including India, China
and Brazil, with Mexico and Turkey thrown in as well. South Korea, the only non-European country in the top 10 for the
Material Wellbeing sub-index, drops from fifth to 10th because of score declines in all three indicators. Read more.

Recently, the Czech Government published an analysis of the Czech pension system, saying that the Czech pension system is sustainable. The document gives an overview of selected pension systems and should serve as the starting point for further debate and steps for the next government (general elections will be held in October 2017).  

Read also the article How Will Evolving Employment Models Impact Retirement Savings? by Marsh, saying that "Governments and societies need to accept that employment models are evolving & ensure that social protection systems remain fit-for-purpose."

Members of the American Chamber of Commerce in the Czech Republic