EUROPE - Greece, Slovenia and Spain have topped a list compiled by Allianz Global Investors (AGI) of the most unsustainable pensions systems in Europe.

According to the AGI Pension Sustainability Index, Greece also comes third internationally after India and China.

The statistics have been compiled according to demographic situation in the country, layout of the pension system and the status of public finances.

While Greece and Spain are running a “generous” first pillar, in Greece the “very generous first pillar” is the main problem while Slovenia and Spain lack a sufficient multi-pillar system.

“Any income meant to cover anything but the most basic of needs should be financed by other means such as pensions from funded sources,” AGI argued in its report.

It cites Australia, which achieved the best place in the sustainability ranking, Ireland and the UK as applying this minimum replacement rate approach.

However, because of national debt stemming from the financial crisis, Ireland ranks sixths among unsustainable pension systems in Western Europe after Greece, Spain, Belgium, Portugal and Austria.

Romania is ranked in second place after Slovenia in the CEE ranking, despite having only introduced a mandatory second pillar last year.

But AGI that Romania’s state finances have been seriously deteriorated by the recent financial crisis.

The investment company also noted that EU projections on the old-age dependency ratio for many CEE countries has been raised since 2006, which makes the pensions system more vulnerable.

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