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Saudi Arabia pension system shows positive signs in Mercer's 2019 Global Pension Index
• Eleventh annual Melbourne Mercer Global Pension Index compares 37 retirement systems
• Saudi Arabia received better ratings than Japan and Italy 
 
 
 
Riyadh, 7 November 2019:   Mercer, a global consulting leader in health, wealth and career, released the results of its 2019 Melbourne Mercer Global Pension Index survey (MMGPI) that compares pension plans across the world. According to the survey, Saudi Arabia had an overall index value of 57.1 among the countries analysed, scoring better than countries like Japan and Italy.
 
This year’s index edition added three retirement systems; Philippines, Thailand and Turkey, to compare a total of 37 retirement systems across the globe and covering almost two-thirds of the world’s population. 
 
The index highlights key strengths of retirement pension systems around three sub-indexes - adequacy, sustainably and integrity, where Saudi Arabia scored 59.6, 50.5 and 62.2, respectively. The Kingdom of Saudi Arabia demonstrated positive results in adequacy due to the Kingdom’s generous retirement benefits with high minimum pensions relative to earnings, as well as the high net household saving rate. Positive scores around sustainability were also noted due to a sound structure with a funded pension system and a compulsory participation from employees and employers with mandatory contributions set aside for retirement benefits. The report also acknowledges Saudi’s efforts in integrity with regards to the regulated pension systems which are continuously being monitored by the government and audited by external auditors. 
 
Tarek Zouiten, Mercer's Retirement Business Leader for the Middle East, said: “We are pleased to have Saudi Arabia in the Global Pension Index for the second year, especially with the country keeping its positive rating. The government is working towards implementing new 
strategies that will allow Saudi Arabia to improve its current pension system, including better administration processes, more digitalization, stronger governance and better coordination between government agencies. The Saudi Government is also committed to working with the private sector in order to provide customised benefits and services for pensioners and beneficiaries as an add-on for the existing services in all regions of the kingdom”.
 
The report also underlines areas of improvement for the pension system surveyed. In the Kingdom of Saudi Arabia, the report suggests improving the minimum level of support for the lowest earning group under adequacy while in terms of sustainability, it is recommended to increase the state pension age to better reflect increasing life expectancy. Finally, the integrity index could be further elevated by enhancing the required level of communication to pensioners and building awareness among employees on the need to save toward retirement.
 
The MMGPI uses the weighted average of the sub-indices of adequacy, sustainability and integrity to measure each retirement system against more than 40 indicators. The 2019 Index takes a new approach to calculate the net replacement rate, that is, the level of retirement income provided to replace the previous level of employment earnings. While most previous Index reports have calculated a net replacement rate based on the median income earner, the current report uses a range of income levels based on the Organisation for Economic Co-operation and Development data to represent a broader group of retirees.
 
By the numbers
 
The Netherlands had the highest index value (81.0), and has consistently held first or second position for 10 out of the past 11 MMGPI reports. Thailand had the lowest index value (39.4). 
 
For each sub-index, the highest scores were Ireland for adequacy (81.5), Denmark for sustainability (82.0) and Finland for integrity (92.3). The lowest scores were Thailand for adequacy (35.8), Italy for sustainability (19.0) and Philippines for integrity (34.7)
 
The MMGPI, supported by the Victorian Government of Australia, is a collaborative research project between the Monash Centre for Financial Studies (MCFS) – a research centre based within Monash Business School at Monash University in Melbourne – and professional services firm, Mercer. 

Posted by : Saudi Arabia,Riyadh, Jeddah, Dammam, Meccca and Medina PR Network Editorial Team
Viewed 1034 times
PR Category : Banking & Investments
Posted on : Thursday, November 7, 2019  5:19:00 PM UAE local time (GMT+4)
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