EUROPE – Portugal has the best overall pensions system in Europe, according to Aon Consulting’s new European Pensions Barometer.
Aon said Portugal, Ireland and the Netherlands were in the lead – with Belgium in last place. And there were predictions that the UK will slide from its current number six ranking.
The Barometer – the first such study conducted by Aon - analysed the pension landscapes of 15 pre-accession EU member countries, and ranked their pension schemes.
The research, which started in July, focussed on four key areas: demographics, affordability and sustainability of state pensions, adequacy of state pensions and the percentage of assets in company pensions.
Portugal topped the table as “most favourable” due to its high growth rate, longer working patterns and good, relatively affordable state pensions.
Its company scheme assets – although not very large – were also still greater than many other European countries, which had no scheme assets at all.
Not everybody agrees with Aon’s assessment on Portugal, however.
Rival firm Watson Wyatt said: “In our opinion, the Portuguese pension landscape is not very bright.
“The population is ageing fast and over the last decade unemployment of older people as well as the increased weight of early retirement pensions are the obvious result of very substantial restructuring processes that Portuguese and multinational companies operating in Portugal have undergone.
“These developments have stressed the short to medium term financial unsustainability of the state pension scheme. In fact, the current centre-left government has suspended new early retirement pension in both the non-civil servants and the civil servants schemes.
“A number of further cuts in state pension and healthcare systems are underway.”
The spokesperson explained that very few Portuguese companies provide pension plans and multinationals, especially of Anglo-Saxon origin, typically sponsor small defined contribution plans with pension targets below 15% of final salary
“These plans have, nevertheless, become more sophisticated over time.”
He added that Portugal still has the opportunity “to do things right” if a broad consensus is reached between government and the people to move to a new legislative environment.
According to Aon, Belgium came in last as “least favourable” due to its very low growth rates, with particularly low immigration.
“Its state pension scheme is among the least generous in Europe, and there is very little by way of assets in company pension schemes,” said an Aon press statement released today.
According to an Aon spokesperson, the five-strong research team will continue to monitor the European pensions landscape.
It plans to put out another expanded Barometer in the next couple of years as soon as pensions information from Eastern European states is available.
Sweden came in fourth place, followed by Denmark, the UK, Luxembourg, Finland and Spain. Austria was ranked tenth, followed by France, Greece, Germany, Italy and Belgium.