Calls for pension funds to channel capital into national priorities have intensified, with the Mercer CFA Institute Global Pension Index highlighting the issue as central – particularly for the UK, where debates on investment mandates and economic growth are reshaping pension policy.
The report sets out that this trend spans infrastructure, innovation, and broader economic development, as governments worldwide increasingly view retirement assets as a lever for national interests.
The report warns that “governments can make particular investments attractive to pension funds without the use of compulsion and should refrain from requiring a ‘floor’ level of investment in a particular asset class”.
“The actual investment decision should be left to the pension fund,” it added.
This discussion is especially pronounced in the UK, where the government’s Mansion House Accord has spurred conversations about directing pension investments into the domestic economy.
Mercer cautions against prescriptive interventions.
“Mandating parts of the investment strategy, as contemplated under the Mansion House Accord, should not form part of the government’s roadmap. We would instead like for the government to work with the industry to develop a pipeline of investment opportunities, and to create a globally competitive business environment, rather than introducing measures such as mandating investments,” said Tess Page, UK wealth strategy leader at Mercer.
Margaret Franklin, president and chief executive officer of CFA Institute, reinforces the primacy of the pension system’s fiduciary duty, stating: “Regulations and government actions – from tax policies to investment mandates – profoundly shape how pension funds can allocate capital. The central purpose of pensions must remain to secure retirement income, guided by fiduciary duty above all else.”
She added: “Pension systems work best when they balance innovation and national priorities with the enduring responsibility to serve end-investors’ interests.”
While the UK has retained its B grade and is recognised for automatic enrolment achievements, the country’s pension savings gap is projected to reach £25trn by 2050, underscoring continued challenges.
“Pension systems work best when they balance innovation and national priorities with the enduring responsibility to serve end-investors’ interests,” according to the report.
Pension assets remain the single largest institutional client segment for UK investment managers, representing approximately £2trn and highlighting the sector’s significant potential impact on national growth, according to the Investment Association’s 2025 industry report.
World rankings
The Netherlands, Iceland, Denmark and Israel have all retained their coveted A-grade status, reinforcing their reputation as leaders in delivering robust, sustainable and equitable retirement income systems.
The Mercer CFA Institute Global Pension Index emphasises that these top-performing countries excel in providing comprehensive benefits, maintaining system integrity, and ensuring long-term sustainability amid demographic and economic shifts.
The consistent high ranking of the Netherlands, Iceland, Denmark, and Israel further demonstrates their success in meeting retirees’ needs while adapting to evolving global challenges, according to the report.
Commenting on Denmark’s ranking, the country’s pensions industry association said the top-three position was “completely justified”, but that the pension system nevertheless had some minor problems.
Lotte Katrine Ravn, head of pensions at Insurance & Pension Denmark (IPD), said: “One of the central focus areas should be increased flexibility in the transition from working life to retirement”, adding that the lobby group was raising this issue with politicians.
Noting Mercer’s observation of increasing political interference in pension sector investment within several countries, Ravn said: “This shows the strength of the Danish pension system, where companies may only invest in the best interests of savers.”
New A grader
Singapore’s elevation to the top tier this year is a notable milestone, as it is now the only Asian country with an A rating in the Index, moving up from its previous B+ grade.
This highlights the government’s persistent efforts to enhance retirement adequacy and structural resilience for its citizens.
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